Where are the Algorithms’ Yachts?

Wall Street slowly goes bionic:

Louis Morgan, managing director of hedge-fund firm HG Trading, has never talked to his best trader. That’s because his best trader is a machine.
Morgan’s top earner is a computer whose software can monitor thousands of stocks simultaneously, and respond in less than a blink of an eye when opportunities arise.
“Doing what we do by hand would be impossible,” said Morgan, who focuses on statistical arbitrage — taking advantage of sudden and potentially profitable price anomalies between securities that usually trade in correlation.
Morgan uses a computer trading system based on algorithms, complex mathematical formulas that quickly weigh a huge number of possible trades and execute orders in milliseconds (a millisecond is one thousandth of a second).

Best of all, you don’t have to pay an algorithm a bonus.
If all goes well, I think Wall Street can entirely displace humans by 2011. Of course, stock blogging can never be replicated by a machine. (They wouldn’t dare.)

Posted by Eddy Elfenbein on June 1st, 2007 at 10:14 am

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.