They also shed light on the relationship between the price adjustment process and traders' information processing delays, Timeliness imposes an interesting structure on trader competition: traders with longer information processing delays trade less frequently, submit smaller orders and enjoy lower profits per trade.
(Still, Goldman attracted scrutiny last year for "huddles" that its research analysts held with the firm's traders, information that it only later shared with clients, if at all. That has prompted inquiries by regulators like the Financial Industry Regulatory Authority into how banks distribute their research).
Schmiedel admits that makes for higher transaction costs but says the quality of his traders' information gives Hugo Neu a one- or two-day jump on the competition for the best and most profitable scrap contracts.
Despite receiving a series of suspicious transaction reports about the fabulously prescient share deals the targets had placed, the officers had no idea where the trader's information was coming from.
One such trader, an information technology graduate who saw a business opportunity in the booming illegal gold trade after failing to get a job in Kampala, travels from mine to mine, buying gold and carrying it back to the capital.
The Social Trader processes information interactively.
For a trader, market information is the ocean where they swim and hunt for profits.
"For a trader, market information is the ocean where they swim and hunt for profits," he says, no doubt drawing from his own experience on the trading floor.
In the market microstructure literature it is well recognized that, when people trade, there are some participants with better information (informed traders) than others (uninformed traders) about the fundamental value of the asset.
Each informed trader's initial information is a noisy estimate of the long-term value of the asset, and the different signals received by informed traders can have a variety of correlation structures.
