Even Higher Frequency Trading on the Way
pic by artemuestra @ Flickr
Super-secret dark money pools and High Frequency Trading firms or HFTs had no sooner gotten a bad rap when another form of trading is about to steal it’s crown.
Thanks to an almost villainous take on the Singularity, a new group of computer-driven, quant-guided traders are now getting their hands on market data before other investors have a chance to see it (subscription required).
What’s the big deal?
With their supercomputers, these firms can analyze the data, make trading decisions and take positions in milliseconds. And that leaves the rest of the investors picking up the scraps–or so it seems.
It does seem unfair. But, it’s important to note that just as this form of technology arrived on the scene, a new technology–or a new use for current technology–will be along to counter it or supersede it. When it comes to high-speed trading and instant indicator processing, you literally ain’t seen nothing yet.
In the next decade or so, expect profound leaps in trading technology. Expect new types of predictive technology and prediction markets, too. Will they pose problems? You bet, but we should expect benefits, as well.
You could make the case that even though computer-driven trading has dropped the ball–and apparently a thousand points in the Dow–it is making the pricing of assets far more efficient than ever before.
Technology is also making the market more robust, finding new markets and bringing in new traders.
As long as we’re careful and as long as this technology makes its way into the general trading populace, there’s reason to believe that we can integrate even higher frequency trading systems and technology into the markets.
Related posts:
- Making Fortunes in Milliseconds
- Small Investors Can Fight Back Against High-Speed Investing
- Preparing For The Killer Investment App: Automated Trading
- Automated Trading and the Singularity
- Three Keys To Prepare For Investing 3.0
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I'm George Ulmer. Matt and I started this blog and launched the Online Investing AI business. Our goal is to develop the technology to allow anyone to retire after working for 10 years.
is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
