Money and Speed: Inside the Black Box

Money and Speed: Inside the Black Box

2011, Economics  -   33 Comments
Ratings: 8.53/10 from 92 users.

Money and Speed: Inside the Black Box is a thriller based on actual events that takes you to the heart of our automated world.

Based on interviews with those directly involved and data visualizations up to the millisecond, it reconstructs the flash crash of May 6th 2010: the fastest and deepest U.S. stock market plunge ever. Money and Speed: Inside the Black Box is developed by filmmaker Marije Meerman in close collaboration with design studio Catalogtree.

This exploratory documentary is a marriage of strong storytelling and meticulous visual analysis. A rare opportunity to experience what is happening inside the black boxes of our rapidly evolving financial markets.

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33 Comments / User Reviews

  1. ElaineMDG

    Sorry,ni thought I'd be able to edit that last post since I'm posting from an iPad and couldn't see it all before posting.
    In the 4th paragraph, that *should* read "set and forget; let the computers run the trades for you".
    Just for clarification: I DO use an EA (expert advisor), but not for actual trading. A friend helped me adapt one he wrote that I can use it for back-testing strategies-that's IT! EVERY person I've spoken to who has been trading for a length of time, (>5yrs), has had problems, losing money, because of EAs. While I'm sure there are perfectly good ones out there, I prefer not to take the chance. Not to mention, I also am REALLY enjoying manually trading

  2. ElaineMDG

    Wow...I'm wishing I'd watched some of these documentaries before I decided to get into this field about 6 months ago. Although I've learned a LOT these past 6 months, the first thing I learned was its even more laden with crooks and con men than I ever thought-especially a newbie going into Forex trading. Perhaps it's my age, but I approached everything with a cynical eye and sought out some trusted, long-time traders, reputable review sites, (there ARE some out here that aren't owned by sleazy brokers-or MLM Marketers badly disguised as "brokers" or "traders").
    I'm in a situation due to my age and disabilities, that I haven't many options for any type of employment, (housebound, unable to drive and stuck in a very small town). Having an advanced degree and almost 30yrs in medicine has also limited my choices, and I had to learn about the markets and financial system from the ground up. I've certainly had some bumps in the road, but am grateful to a few knowledgable, honest people who've taken me under their wings-including one gentleman who put me through 6 weeks of intense study of the fundamentals and economics of the markets.
    I'm not delusional and because of tight risk-management, know it's going to take awhile to compound my account to a point I can begin withdrawing money. There is NO HOLY GRAIL, NO "Get rich in a short period of time"!
    I WILL say that when it comes to automated trading, you're bombarded with programs and promises of "set and forget, let the so putters do your work for you!", at every turn. I'm constantly told, (NOT by the people working with me, others in the field), that the ONLY way forward in trading is automation-using algo's and or some of the new "expert advisors" that supposedly "learn" from their errors or losses.
    Maybe I'll be left behind and end up losing everything; but I'll stick with doing everything manually, even if I have to sit at the computer at all hours, 12+ hours a day!! Right now, I'm doing pretty good and was even approached by a firm last week to "try out" for a permanent position in their company. After looking into them and then talking to them again, it turns out they do mainly HFT and algo trading-just need folks to "man the machines" so-to-speak. Although they expressed interest in my strategy I use "news trading", I declined their offer.
    I'll stick with my small, humble, manual system on my own. I always knew the risk I was taking when starting this, I was out of any other options. Who knows, maybe in the next year I'll be able to start paying myself a small salary. The hope, purpose and education I've gotten so far are already more than I expected!!

  3. Philosochef

    Sounds like the first successful test of a stock market bomb. They left it on just long enough for effect and then they switched it off and the market quickly recovered....
    "Cool, ok so now we know that we can crash the market whenever we feel like it. "

  4. awful_truth

    Another excellent documentary that goes hand in hand with 2 other documentaries, 'The Wall street code', and 'Quants: The Alchemists of Wall Street'. I advise everyone to check out all 3 of these documentaries, (all on this website) and you will never invest any money in the stock market. Why?
    Simply put; it is a rigged game, the rules cannot be enforced, and majority of money is no longer made because of investing in a good stock. This ability is even beyond your bank, let alone your financial advisor, or stock broker. (time is money; especially at the micro-second)
    Since 1920 when Charles Mitchell got the idea to get the general public to invest with the intent to "spread the risk", technology has now ensured that the general public will only lose. (even the wealthy are at risk again, unless they have the fastest connections, and the best algorythyms working for them)

  5. online forex trading

    really a informative and useful documentary...i like this very much.

  6. War Dog 666 - U

    So damn clever, not, the bottom line is 'organized crime' - small wonder as to why the Germans hated the Jews - different time same old tricks, it's all a bunch of crap - then they take their wealth and further deplete the planet of natural resources - ain't that just sooo genius for ya.

  7. chard01

    all offshored accounts i have closed now keep all cash kept in jar buried under rhondedendra such a nice flower ever greening.

  8. Paul Giff

    As a Surgeon living overseas, the letter that Bernard Madoff wrote a few days ago gave me reason to close all my accounts and relax for a few months, for what it's worth.

    Joseph Huntington
    Cebu City - Phils

  9. StevenLJones

    probably organized crime. But what happens when RTD2 decides it doesn't what to be turned off?

  10. kaitse8

    The system is corrupt!

  11. BruceEWoych

    computational LOOTING ...the flash crash was orchestrated.

  12. emp12345

    if they say they don't know what happened during the flash crash, now that is just a lie. The people in control of the machines obviously know what happened. In the USA all this information is stored. But the people in control will only use it against those who challenge their authority. It is just a small gang with power and they will loot and steal until the whole thing collapses.

    About trading. Apart from the fact that the big banks can use flash orders, fractional quotes to front run everybody else on top of that if you place a trade your trade will be immediately examined. Who is placing this trade, what is his average stop loss, what is his average profit target. Etc. I find these days that when you place a trade the price immediately moves the other way, that is in the wrong direction. Myself I find it hard to believe that my small trades have this effect ... but they have.

    1. TheDanishViking

      You clearly know much more about trading than I do. But isn't it plausible that very sophisticated trading programs could cause this crash without any humans having planned it? Isn't it possible?
      Maybe this sounds naive, but couldn't it be like "the perfect storm" where all the little parameters interact in a very special, and highly unlikely manner? I have worked a little with artificial neural networks and the whole point is exactly than you cannot describe how they work (because if you could you could simply write a program instead to do the same thing). So isn't it possible that nobody actually understands what happened and nobody is guilty?

    2. emp12345

      hi, my point is that the claim nobody knows what happened is just a lie. Every trade is traceable. Not for me but surely for those who control the machines. The information who did which trades is obviously available. So then you can at least reconstruct what happened.

      It is just like they can see exactly who writes what on this board. I can not see who you are and where you are located but this information is available for those in power to get this information.

      Your point that such an event might be caused like a black swan event with no guilty parties involved I would believe if there would not be so many crooks in the banks, the US government, the SEC, the rating agencies etc. It is just a cabal of crooks. I even bought a stock of a "Chinese" company that does not even exist, listed on the US stock market. No-one to protect you from this. The SEC does nothing (probably paid of these corrupt thugs). The money is gone they say. Now who wants to invest their hard earned money in such a crooked system?

    3. TheDanishViking

      Fair enough. The SEC could no doubt reconstruct exactly what happened, but they are not allowed to reveal the trading details according to US law (or so they claim in the film). Still if somebody made a load of money on this unique event I think the details should be made open to the public.

      But it still doesn't make sense to me. If you have the power to manipulate the market to such an extent then why be so obvious about it? As one bull said to another: "Why not walk down and f..k ALL the cows?"
      So I guess I actually believe the "official story" that it was simply somekind of "computer glitch". The question for me is whether the SEC is trying to hide the fact that (even with access to all the data) they still don't have a clue what actually happened.

    4. emp12345

      my point is that they can reconstruct all what happened and if US law not allows this is highly suspicious. I started trading on the US markets around 1999 because I thought it was the most fair and honest. But all what has happened since then, like 911 which obviously was an inside job, the wars, the socalled "war on terror", the bank bailouts, the nice little rules they have for the banks like flash orders and fractional quotes so they can front run everybody else, huge sums of money paid to these "revolving door" lobbyists like Robert Rubin (100 million from Citibank) made me understand that a criminal cabal is in charge in the USA and these are the people in control of Wallstreet. I do not trade stocks any longer (because stocks may be listed on the US exchange but some not even exist in realisty) but still futures. But I find that the game here is rigged as well. Like I mentioned earlier I believe that when you place a trade their machines will try to take you out. These few big banks are the only ones who can print money at will. They will move the market where they want it to be since they can print all the money to do so. If they need to take a certain "price route" to take you out then that is what they will do.

    5. Paul Gloor

      So basically, what you're saying is they're laundering via the stock exchange. Investing printed money and getting real money, nice n clean.
      Even so, If their machines are using Neural Networks or other sophisticated algorithms to plot trades, the system is automated, it runs on strict rules that have been tuned through self learning. If one system sees a dip, it starts selling, another sees the dip and it starts selling etc. then ruling to pick back up at low dollar once everything hits the bottom threshold. I can see that causing the latency they described and how the prices would recover so fast once they all got back into position and in the end, its really nobodies fault directly unless someone orchestrated one or more high volume trades that triggered the cascade. I think that's what they should be looking for over pointing fingers at the data centers specifically, their programs did what they were programmed to do.
      I can appreciate the know-how it takes to design and program an automated system like that. Rest assured though, If I had those skills, I would use them for the benefit of mankind... Unlike those damn banks ! :P

    6. emp12345

      indeed that is what I think is going on. They pay hardly any interest when printing new money. Make a quick few percent on the money you print and then get rid of that free money again. Of course I do not know what happened and what is exactly happening behind these closed doors but if you have a few big banks that are in full control of the market I do not believe "unexpected" events happen. These people are in full control plus they are all crooks. As a small trader you can ride along and if you have a good plan and stick to it you can make some money but it is increasingly difficult because I believe these banks act on the trades that come in rather than some algorithm that acts because of some price level has been reached. Depending on positions taken by small traders they will make small swings in the market to cash in on them. Some small traders will then win but more will obviously loose.

      I can not recommend starting as a trader at this point in time. Too many crooks in places of power. I actually started trading because the job I had as an engineer was paying less and less while these people in management were making more and more on top of their multi million $$ salaries. But I believe as a trader you have less control than if you were playing in a casino. You can not know what goes on behind closed doors and how much the game is rigged against you. On top of that the government may invent some additional taxes so you will never be able to make a living out of it.

  13. TheDanishViking

    The film implies that the reason for the sudden crash was caused by some unexplainable "algorithmic trading glitch". And that the SEC tried to blame the whole thing on a specific Kansas trading company, in order to create a false sense of security. But actually we don't understand why, or what, happened, and it could happen again at any time?! Scary stuff!

    1. oQ

      I don't find that scary, i find that encouraging.

  14. Bobs

    I very well remember this very day. I was about to long GDP/JPY which already had dropped about 600 pip overnight and, suddenly I see the pair plunging another 600 pip. Immediately I put a 5-time leverage long position and in a matter of hours the pair jumped from around 129 to 136 yens. One of the most thrilling trades to date.

    1. Paul Gloor

      Can I get you folks in the know to drop me a line ? I'm looking to learn as much as I can about forex trading, indicators and the like. My facebook is linked to my disqus account, or you can drop me a line on skype.
      moderator edit: no e-mails allowed

  15. Subhro Paul

    The flash crash happened because of dumb execution. Why blame it on the electronic trading and computer algorithms. The firm that is responsible for this lost money due to this faulty execution. Anyways if you believe in firm foundation theory, it doesn't matter what happens on one day of trading.

  16. Sieben Stern

    I get this feeling like their video gamers whining about lag, except this is a scam that effects everyone.

  17. pwndecaf

    This is a very good doc. I have also taken as much risk out of my money as possible, not because I'm so smart but because I know Big Finance, Wall Street and the Government are all scamming everyone else. The problem is that they are allowed by the government to get away with it. The fact that the SEC won't or "isn't allowed" to look into who made those trades at the millisecond level is not surprising to me - it would provide the smoking gun, so just look at it at the time scale of a second and it is all hidden.

    Bill Black has a few minutes in this doc and is a hero of mine. He was in charge of investigating and prosecuting those involved in the S&L scandal some years ago. He is a frequent commentator on the fraudsters and banksters stealing our money now. He rails against those that refuse to do anything about it - where are the prosecutions like the ones he brought about in his day? The fraudsters play the game with zero risk as they are all institutions too big to fail, so we bail them out. It has to stop.

    Read naked capitalism dot com every day - you will learn a lot and you won't like it. They frequently link to Bill Black's articles. Prepare to get angry, just as I hope you do when you watch this doc. Very good stuff!

  18. KsDevil

    It might be interesting if the average person were to obtain a high frequency trading program (free off the internet) that would add to the current noise in the system. Millions of average people trying different algorithms and causing trading resonances that produce wild mountains and valleys. The insaity of it all is appealing.

    1. PaulGloor

      Have a look at 'FOREX' or currency trading, some of the pairs are insanely volatile. Someone with a sophisticated automated trading system and a reasonably large account can make, or loose, loads by the second.

  19. DigiWongaDude

    Fascinating and scary. One more for the collection! This could have been a powerful muscle flexing message to government to back off from regulation and influence. An orchestrated scare would explain why the system recovered as quickly as it started, and remains totally unexplained. But worse is that the power this wields for anyone who understands the mechanisms is the basis for huge future bank bailouts by simply saying "It wasn't our fault, the machines ran out of control."

    On the one hand the guy above says the machines only do what they are told and we've watched The Terminator too many times, but then the other guy (the historian) says the machines can implement new self evolved algorithms, making it more and more unlikely for us to know what's going on under the hood.

    This is approaching what is referred to in A.I. terms as 'the hard take-off': a scenario in which you plug it in for the first time and it instantly prevents itself from being shutdown. Most A.I. guys say this is extremely unlikely and imagine true A.I. coming as a soft take-off through evolved learning over time. Either way it seems likely that the stock market would be it's birth place. This documentary makes it clear that the jury is out on what might happen with these machines - they are already capable of working their instruction sequences outside our concepts of time.

    Somebody should make a movie about A.I. machines triggering a global economic revolution in a billionth of a second.

  20. Geoffrey Grekin

    Wall-street is a farce!
    Hi-frequency trading only benefits those that can afford to play the game, billionaires who make billions on micro-trades through high powered computers and algorithmic formulas.

    They collect millions n a day and contribute a big fat 0% to the society their siphoning. This money they accumulate for their selves is taken from heart of the economy, investors, producers, innovators, picking away at them few cents at a time in a matter of a 10ths of a mili-second robing them all indiscriminately.

    So i'll reiterate, the stock market is a joke! and the economy is the punchline.

    1. emp12345

      wallstreet is a farce but for other reasons. The real reason is that they bring companies to the stock market for a outrageous amounts of money (called IPO's) and the general public (although they are unaware) pays for it via their pension funds. These companies then start paying their new CEO's en CFO's (who basically are just simple crooks) millions, sometimes billions a year in salaries and bonuses.

      This is at the heart of the problem. But people like you think that the traders are the problem. I do not like HFT myself but once a company has IPO'd and the shares are sold of to pension funds, hedge funds, HFT funds, day traders, private investors etc. then it is basically a zero sum game. 1 party makes money the other loses. The real crime was when they IPO'd a worthless company for far too much money. The bankers and these people in charge of these companies are the real criminals. They let the general public pay far too much for something that is worthless and then they start extracting billions for themselves.