Godlike Productions - Reply to Thread

Users Online Now: 1,632 (Who's On?)	Visitors Today: 32,904
Pageviews Today: 50,240	Threads Today: 28	Posts Today: 263
12:25 AM

REPLY TO THREAD

Subject Algorithmic trading to replace humans in the stock market

User Name

Font color: Font:

In accordance with industry accepted best practices we ask that users limit their copy / paste of copyrighted material to the relevant portions of the article you wish to discuss and no more than 50% of the source material, provide a link back to the original article and provide your original comments / criticism in your post with the article.

[quote:Heretic™:MV8xNjM5MTI5XzczMEM0REEw]
The UK Government’s Foresight panel, led by Dame Clara Furse, has released a working paper that points out that algorithmic trading, or high frequency trading, will soon replace human decision making when it comes to the stock markets. Many countries have already begun replacing humans with one third of the UK trading going to computers and three-quarters of trading in the United States being computer generated.

The Foresight panel warns that this transition to algorithmic trading has its benefits and risks. They have found instances where computer trading can increase volatility in the market and cause massive damage. One example is what is known as self-reinforcing feedback loops. In this case, small changes such as data delays, loop back on themselves and create a bigger change. Normalization of deviance can also occur where risky events are seen as normal until the inevitable crash of the market occurs.

Some benefits the panel sees are an improvement in liquidity, lower costs of transactions and greater market efficiency.
http://www.physorg.com/news/2011-09-algorithmic-humans-stock.html
[/quote]

Original Message The UK Government’s Foresight panel, led by Dame Clara Furse, has released a working paper that points out that algorithmic trading, or high frequency trading, will soon replace human decision making when it comes to the stock markets. Many countries have already begun replacing humans with one third of the UK trading going to computers and three-quarters of trading in the United States being computer generated.

The Foresight panel warns that this transition to algorithmic trading has its benefits and risks. They have found instances where computer trading can increase volatility in the market and cause massive damage. One example is what is known as self-reinforcing feedback loops. In this case, small changes such as data delays, loop back on themselves and create a bigger change. Normalization of deviance can also occur where risky events are seen as normal until the inevitable crash of the market occurs.

Some benefits the panel sees are an improvement in liquidity, lower costs of transactions and greater market efficiency.
[link to www.physorg.com]

Pictures (click to insert)





\| Next Page >>