Are You Trading At A Huge Disadvantage? Do You Even Stand A Chance?

By: ispeculatornew
Date posted: 11.28.2012 (4:00 am) | Write a Comment  (0 Comments)

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We all know that because we are often trading against High Frequency Traders (HFT’s), we are at a disadvantage in terms of speed and price execution. But did you know that you might also be trading against investors that have a whole lot more knowledge than you do?

Digital Economy

I’ve discussed cyber warfare a bit in the past and the other day I stumbled onto a Bloomberg article about Chinese hackers and how powerful they have become in recent years. They are way past the point of hacking into computers like yours and I. These days, they are much more active hacking their way into critical networks. This post reports that one such group hacked its way into in European Union Council, but also networks of companies such as Halliburton and tens of other listed companies. They are able to get access to files, to gain access to emails and documents sent by executives, etc. It’s very elaborate and while the US government does know a lot about what they’re doing by spying on them, there is clearly a lot more that they are not telling us and even more that they don’t know about.

Scary Stuff

There are obvious dangers that come to mind such as a foreign government taking control of nuclear, utility or other infrastructures or even disabling them to some extent. They have also been working hard on stealing all kinds of information to further their own ambitions. It becomes very easy to imagine nightmare scenarios…

But what if they decided to try something else. Either instead or in addition to what they’re doing, they could quite easily get access to financial statements or critical information that would help them better trade these companies. If they’re able to access all emails by a company’s board and executives, you’d think they could easily put their hands on such information right? In such a situation, they would be able to trade prior to earnings being released with an invaluable advantage. If they did it right, they could make it nearly impossible to detect… making them incredible profits.

We Are Not Being Told About This

One big problem is that our entire system is built on trust so even big institutions such as the Fed are very reluctant to discuss such issues. There is very little benefit in giving ideas to hackers all around the world, to diminish the public’s confidence in our

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