Traders suck, right?

Nobody likes financial types. Our collective imagination is littered with images of greedy, hubris-filled sociopaths. Razor-sharp trouser creases, impossibly shiny shoes, the GDP of some South American nation on their wrists. Nick Leeson and Jordan Belfort, Gordon Gekko and Patrick Bateman; they all end up blurring into the same grotesque caricature of the capitalist scumbag, whose scarf collection is worth more than your house. Even Bobby Axelrod, charming as he might be, is still a bit of a knob.

http://i.imgur.com/xu7IKQo.png

So, understandably traders get a bum rap. Even in the magical world of crypto, they're still somehow regarded as a kind of annoying sideshow/necessary evil. On many Slack channels you'll see them swiftly shown the door when they start asking about which exchanges will list such-and-such a coin, or talking their books as they inevitably wind up doing. Even by projects that are building trading-related products! I'm going to argue that crypto traders are actually way out at the forefront of something and that perhaps we should cut them some, ahem... slack. I don't think it's a particularly contentious claim, but it may help to cast the insane growth we've experienced over the past few years in a slightly different light. Crypto traders are, after all, the earliest of early adopters, the ones who've been playing with this technology since it was just a number you couldn't do much with other than buy pizzas and become legendary.

Trading then and now

At the turn of the last century, brokers kept offices as close to 11 Wall Street as possible, so that their messenger boys could quickly run to the exchange, delivering orders and returning with the latest news from the trading floor. Skip forward a century and gone are the frenzied pits and the obnoxious wheeler-dealers. Today the new sound of speculation is the datacentre hum. The brokers, specialists and floor traders having almost completely been replaced by servers, matching engines and HFT algos. Today the length of cable supplied to each co-located firm must be equal, lest a discrepancy of a single foot should confer a billionth of a second’s advantage to one party over another. Today bots have brain farts and companies go under.

This should be a lesson for those who champion the Internet or technology in general as a some kind of blindly democratising force. In the silo of finance it has led to impossibly rigged markets in which algos fight algos for fractions of a penny, thousands of times per second, millions of times per day. We could go on to discuss what it's done in the worlds of marketing and politics but let's just stick with trading for now. Suffice it to say, technology always creates a push and pull between competing interests. It frees, but simultaneously allows for new ways to capture.

In the good old days, big money threw its weight around by fading the market, influential players fomented negative sentiment about the securities they were short and dealers front-ran their clients’ orders. Today big money wields tools so powerful that it consistently outsmarts entire markets. Think about that for a second.

The “revolution” of retail trading

In the late 90's online trading stared becoming a thing. Facilitated by the trickle-down consumer version of the computer revolution, online brokerages started popping up everywhere, offering trading facilities that were formerly reserved for institutions and high net worth investors. They were bringing trading to the masses through the democratising force of the Internet. The decade that followed would see these outfits spreading like wild fire, getting some regulatory clout behind them, becoming much more sophisticated in their marketing and making themselves evermore accessible to the