- Paperback: 384 pages
- Publisher: Crown Business; Reprint edition (June 25, 2013)
- Language: English
- ISBN-10: 0307887189
- ISBN-13: 978-0307887184
- Product Dimensions: 5.1 x 0.9 x 8 inches
- Shipping Weight: 9.9 ounces (View shipping rates and policies)
- Average Customer Review: 223 customer reviews
- Amazon Best Sellers Rank: #86,324 in Books (See Top 100 in Books)
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Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market Paperback – June 25, 2013
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"Far more comprehensive and persuasive [than even Michael Lewis' Flashboys]."
--James Stewart, New York Times Book Review
"An excellent history of the early electronic traders" - Michael Lewis
“Scott Patterson’s Dark Pools is about the most important financial issue no one talks about—how high-frequency traders have rigged the market.”
“Remarkable…even long-time participants in electronic markets will learn a lot from this book.”
“Richly reported…an invaluable piece of timely journalism that should be read by regulators and anyone with a cent in the stock market...You will never look at the opening bell in the same way.”
“An engaging narrative…DARK POOLS is easily the most entertaining and accessible book to cover the new world of stock trading.”
“An education in how markets work, packaged in a thriller worthy of Michael Crichton…. Dark Pools is one of those rare books that is a great summer beach read and a useful trading manual.”
“Very enjoyable….a good story of how innovators destroy the old guard.”
“Dark Pools relays an epic tangle of hacktivists, old-school floor exchanges and traders – all wrestling to game the machines…The stories engage from chapter to chapter, bringing the reader from the outside in.”
“An entertaining account of the key battles in the “algo wars” and the colorful math geeks who fight them—some of whom are now fighting to rein in the monsters they created. Dark Pools is an alarming account.”
“Dark Pools is a must read for all serious investors. Patterson’s methodically researched book exposes the core problems in today’s securities market…His findings should serve as a blueprint for the SEC.”
--Blair Hull, founder of Hull Trading and Ketchum Trading
From the Hardcover edition.
About the Author
SCOTT PATTERSON is a staff reporter at the Wall Street Journal, covering financial regulation from the nation's capital.
Top customer reviews
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This book is a 'must read'. Not only does it give a great summary on how the stock market became computerized (as other reviewers mention), but it really helped me understand how the modern market came to be.
My goal in reading the book was to up my trading game, and while the book gives few trading ideas, it does a great job explaining how 'big money' and the HFTs game (cheat? trade?) the market. Understanding this alone really helps me understand price action at a whole new level.
I did have to remove one star though for the authors lack of understanding of computer algorithms and how they work. He uses "AI" as a catch-all phrase for any computer algorithm, even if it was a crude program that simply trades a stock spread.
The "who" are highly intelligent people, technologists, programmers, physicists, statisticians... and less of the greed driven financiers that you might expect.... although there are plenty mixed in, The "what" is algorithms, computer programs, proximity to trading centers, and information churning through these programs discerning market moves in pico-seconds. The why -- especially at the beginning is less about making money and more about young technologists wanting to snub the establishment of Wall Street, open up markets for everyone, and making the whole process more efficient by essentially removing persons from the transaction.
Of course, all of this leads up to the last couple of years where the SEC is a slow moving entity imposing regulations that seem quaint compared to the speed at which the HF traders adapt and evolve. It is pitting a human against a computer in an algo war that is already rigged for the computer to triumph. Or maybe like the designer drug maker that is always one molecule ahead of the law that keeps the new drug from being illegal.
Dark Pools was a great read and an excellent book to read after Flash Boys!
Wall Street: The place where our 401ks and pension funds go, which we should all probably understand better than we actually do. Despite what could be called, at best, amateur interests in the world of trading, I couldn't put this book down. While by no means a deep technical work, Dark Pools still proved highly educational, offering a lot of insight into the inner workings of today's stock market. Fortunately, Patterson presents the material in a way that's eminently accessible, even for those without a Wall Street Journal subscription. Discovering not just how the market is, but how it came into its current form, was eye opening.
Dark Pools isn't just about the markets, however. It's also a testament to the raw power of computing and its ability to change the way we work in just a few years time. I expected the book to cover some hyper-modern trends like high frequency trading. What I didn't anticipate was a beautiful and inspirational story about a few gifted individuals employing computers to revolutionize the world of finance. As it turns out, one 20-something young man working out of a tiny office near Wall Street actually built large portions of the high tech stock market we see around us today. Ever the idealist, he sought to beat the hordes of greedy and self-serving market makers at their own game, using little more than a closet full of computers and his brain. And in many ways, he succeeded. But the story doesn't end there; this new technology would eventually take on a life of its own, growing and evolving at fantastic pace. Millions and billions would be made and lost in seconds. And it's still going on, all around us. Some say it's out of control.
I thoroughly recommend Dark Pools to anyone with even a passing interest in the stock market or the development of technology. It's an eye-opener on the state of our national finances on one hand, and a testament to the power of man and machine on the other.
- how some HFTs rig systems to get to the front of the line ahead of other traders,
- how prices get systematically manipulated, often crossing over boundaries of legality,
- how this system has produced a very risky situation for the entire securities and financial markets.
His descriptions of the mathematical and software mechanisms of HFT and adjacent transactions are not very sophisticated, but that does not take much away from a fascinating and powerful portrayal of the downward ethical spiral on Wall Street. We need to wake up as a nation (and world, as much of this is mimicked in countries other than the U.S.A.), and change the system towards a fairer and more stable structure.