Human Traders Meet Their Computer Overlords
Humans can do a lot of things better than computers–but that list is shrinking.
Once, investing and trading solely belonged to humans. Computers were number-crunching machines that helped investors and traders make decisions.
Then, algorithmic trading came along. Trading strategies designed and maintained by computers saw more and more action in the market. Although,there were always people nearby monitoring those trades.
Now, computers have taken another step toward mastering the market.
At a recent conference in Barcelona, Spain researchers released their findings that showed computer model trading agents beat human traders and other computer trading systems.
Dr Krishnan Vytelingum designed the winning strategy with Professor Dave Cliff and Professor Nick Jennings at the University of Southampton in 2008.
According to Vytelingum:
“Robot traders can analyse far larger datasets than human traders. They crunch the data faster and more efficiently and act on it faster. Robot trading is becoming more and more prominent in financial markets and currently dominates the foreign exchange market with 70 per cent of trade going through robot traders.”
The system was originally designed to just beat other robot traders, thumping humans was a bonus.
I think it isn’t just the ability to analyse datasets; robots trade without emotion. Greed and fear are trade killers. That limits big mistakes.
This is probably just the beginning.