New Evidence for Humanity’s Irrelevance: Revenge of the Algos
| Nov 30th, 2011 | Filed under: Algorithmic and high-frequency trading, Timely Research, Today's Post | By: cfaille |
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Algorithms can crunch the numbers, and good hardware connections can increase speed, but one needs a human to tell or to make sense of a good story. Right?
Maybe not: Bloomberg, in a recent white paper, looks beyond the quantitative frequency of trades and the companies that provide relevant services to “compete in the low-latency space.” This “race to zero,” Bloomberg suggests, is becoming rather stale, and the question is: where does the next advantage lie?
Algorithms are going qualitative. The robots aren’t just faster than us; they are in certain respects smarter, as two human “Jeopardy!” contestants recently discovered. Thus, the next frontier for competitive differentiation could be found in the qualitative use of information, or what Bloomberg calls “the ability to parse and act on unstructured data in an automated manner,” – a development suited in particular to event-driven equity trading.
For service providers (like, not coincidentally, Bloomberg) this means competition in the availability of market-moving stories, the robust tagging of stories to companies and topics in ways that will make it possible for traders and/or their machines to act in front of the broader market, and machine-readable feeds from a wide variety of news organizations. More…
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Author Bio:
Christopher Faille is a Jamesian pragmatist. William James has taught him, for example, that "you can say of a line that it runs east, or you can say that it runs west, and the line per se accepts both descriptions without rebelling at the inconsistency."
[...] – Revenge of the algos. [...]
[...] So while “the race to zero latency is a strategy with a foreseeable and predictable conclusion,” the opportunities to automate event-driven trading will soon open themselves to “an unimaginable range of players and strategies.” (Full article here). [...]
[...] The revenge of the algos [...]