SIR Economics Investigation Abstract
THE EVOLUTION OF MARKET DYNAMICS: LEVELING THE GLOBAL PLAYING FIELD
Presenters:
William Konrad, Illinois Mathematics and Science Academy, 1500 West Sullivan Road, Aurora, IL 60506
Robert Main, Illinois Mathematics and Science Academy, 1500 West Sullivan Road, Aurora, IL 60506
Mentor:
Mrs. Linda Thorp, Refco, LLC
Abstract:
Trading the markets used to be an exclusive game, limited to only the wealthiest individuals or institutions. With the introduction of the internet, various opportunities arose for the average investor to enter the market. Whereas all brokerage used to be over the phone, market participants can now choose between web based or proprietary trading platforms as well as standard brokerage. Different levels of brokerage service have also emerged ranging from simple order transaction to full service brokerage, all the way to managed funds. This introduction of short-term retail capital has permanently changed the dynamics of the financial markets in a quantifiable manner. Through our own trading and research with Refco LLC, the world’s largest non-bank brokerage firm, we have witnessed the effects of these traders and have devised strategies to capitalize on our knowledge of their trading practices. We have concluded through analysis of these trading systems as well as experience on the disappearing trading floors not only that the markets are becoming more efficient, but that the nature of the markets is fundamentally and irreversibly changing.