Day Trading on Steroids: He's seated amid 24 computer screens, each of which flashes hundreds of numbers. Vos points out the one that matters: a line chart that shows he's made more than $5,000 after rapidly buying and selling millions of shares of stock. ... "I saw the world of computers and trading converging," Cummings said. "So the idea was really to just create a robot that traded like a pit trader." ... Cummings doesn't think his idea is unique. Instead, he was uniquely positioned to execute it -- he could code software with a trader's mind. ...Rizzello said he thinks Tradebot is one of the Nasdaq's top 10 traders, by volume.
Alea, a new to me blog, is all over Tradebots, and it's successor, BATS. More from Alea:
Market Effects of Autodealing
High Frequency Automated Trading
Algorithmic Arms Race
Algorithmic Arms Race [2]
Chips with everything for traders: This particular program, he says, is actually a modified version of a previous one he wrote for the Norwegian ministry of defence that could be used to track down nuclear submarines in the murky waters of the fjords...."One has some notion of what kind of sounds a sub can make and we try to spot this sound among an ensemble of signals," he says. "This works on the same principle - it is very much like eavesdropping on one specific conversation in a noisy crowded room. But I'm not going to tell you any more than that."...Computerised trading of one kind or another now dominates London's financial markets. At least 50 per cent of the trades made in FTSE100 stocks originate from so-called "black-box" trading systems, or trading algorithms. Some investment banks put the figure nearer 60 per cent.
The smartest (or nuttiest) futurist on Earth: Kurzweil says he is applying Simons-like quantitative analysis to take advantage of market inefficiencies. And he's confident that, just as he trained computers to recognize patterns in human speech or the sound of a violin, he can do the same with currency fluctuations and stock-ownership trends. The ultimate goal is to create the first fully artificially intelligent quant fund - a black box that can learn to monitor itself and adjust. Although he started the company back in 1999, the fund has only been trading for about a year....How's he doing? Kurzweil won't say, citing SEC rules, nor will his investors. "I view Ray as one of the best pattern-recognition people in the world," says Khosla, when asked why he put money into FatKat. "I am a happy investor in Ray's company. A very happy investor."
Blogs with a quant/machine trading focus:
Dinosaur Technology and Trading
Chris Donnan: Programming - Brooklyn Style (you gotta love that title)
Last, but not least, another new to me blog, Zero Beta, takes a skeptical view of machines in the market: "By handing over power and money to machines left unchecked we may be setting ourselves up for an ugly scenario. What if they are THAT good? What if they can learn? A mild result would be a lack of interest in the financial market system from the ordinary investor. If expected returns go negative – much like a casino, you will see much less investment and much more hording of money. There will always be the gamblers but those with the best machine will always win – I believe they are called the house at the Borgata."
Update: C++ Trader links a Bloomerg article on AI and trading and has some thoughts.
Computer-guided stock trading reaches levels undreamed of in sci-fi: "In his cubicle overlooking the trading floor, Kearns, 44, consults with Lehman Brothers traders as Ph.D.s tap away at secret software. The programs they’re writing are designed to sift through billions of trades and spot subtle patterns in world markets. Kearns, a computer scientist who has a doctorate from Harvard University, says the code is part of a dream he’s been chasing for more than two decades: to imbue computers with artificial intelligence, or AI."
More discussion on this topic:
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Posted by: Chuck | March 19, 2008 at 08:53 PM