Who can explain this sentence to me in lame man terms pls??

*Program Trading, algorithm trading all conspire to turn opponents against short selling and the complete trust in financial markets..because they are black box systems that can replace humans....and they bring some added chaos to the market.

Does this mean that instead of investors carrying out trading with help of short selling hedge fund managers or with the help of other financial institutions like banks, investors can use these computerized trading system. The advantages of this are that it is a 'decision support tool', that is based on pre-defined parameters, analyses market data, takes decisions and executes them. It helps in reducing the time taken to react to market events. This also helps in increasing the number of parallel processes that can be executed by a trader and removes the possibility of human errors and influence of emotions in decision making.

What added chaos do they bring to the market??

 

The chaos of market over-reaction due to cascade behaviours ==> increased volatility.

Yes, cascade behaviours happens to "human systems" as well, but with automatic algorithms it is way more quick and hence difficult to control (ie, to make consistent with informational gains).

 

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