Elistan

I just noticed this today from a /. postin - UAL's stock lost $1.14 billion for a moment on Monday when automated trading programs saw a news report about filing for bankruptcy. The article was from 2002, but mis-posted as new news.

The point being, "The damage was exacerbated by the growing use on Wall Street of automated programs that trigger stock trades without any human interaction. The so-called algorithmic trading mechanisms, which buy and sell stocks based on news headlines and earnings data, were responsible for roughly a quarter of New York Stock Exchange trades in the last week of August."

http://online.wsj.com/article_print/SB1221...4359017593.html

Man. Maybe it's a good thing, maybe it makes everything work better. But I can see this leading to a financial disaster as bad as anything we've seen.

sahtt

I'm fairly familiar with the general construction of those progams, although GS has some that no one else really knows about/understands.

There have been all types that come and ago. They aren't any better then humans and I've NEVER seen the same program work for more then a couple years at most. A couple guys I know made LARGE money beating those automated systems. Bottom line is money is still money and if it doesn't work someone is going to foot the bill.

Edited for magician so he can sleep tonight.

magician

Foot the bill, perhaps?

magician

Algorithmic trading is the Holy Grail of technical analysts. To the extent that technical analysis cannot produce sustained above-average (risk-adjusted) returns, these things should fade into the woodwork, as sahtt says.

Alas, they won't. And when someone makes a goof like the UAL headline mentioned, they could create all sorts of havoc.

Remember, however, that computers improve our lives.

AssassinJN

SkyNet spy?