Earlier this week, we explored another possible technological revolution in the financial world. AlgoDeal is opening up the once secret world of quant funds to individual trading system developers.
This is just the beginning. Computing power is exponentially increasing and that means its ability to solve investment problems and search for investment opportunities is increasing with it.
According to to this article on how the computer will evolve in the next 100 years on the How Stuff Works site:
“Assuming microprocessor manufacturers can continue to live up to Moore’s Law, the processing power of our computers should double every two years. That would mean computers 100 years from now would be 33,554,432 times more powerful than the current models. That’s hard to imagine.”
We can start to imagine, though, what that means for finance.
As you scan through future financial headlines, you’ll see more terms and acronyms that will remind you that a new world of finance will be heading our way, sailing on the winds of this increased computing power.
Here are a few terms you should look for:
- Artificial Intelligence of AI
- Genetic programming
- Neural Nets
- Swarm intelligence
- High Frequency Trading, or HFT
- Algorithmic trading
These are all forms of technology that will influence the markets. They’re not even necessarily new. Larger investment firms are using them now.
But, with more computing power, they will begin to creep toward their full potential. And they’ll start to influence the lives of ordinary traders and investors.
These technologies and methodologies can pave the way for more predictable, more robust trading strategies and trading systems.
But, a word of caution. It’s easy to get wrapped up in the power of computing technology. Our new worries may not be whether they work or not, but the ethical dimensions of using them.
I’d love to hear your opinion of new trading technologies. Are they good for us? Bad? Do they even matter?