Sun, 12 Oct 2008

The Rise of the (Financial) Machines

Watching the insane gyrations of the stock market over the past few weeks, I've become convinced that the implementation of trading algorithms is a large part of the problem.

Computers are, be definition, obsessive and compulsive. They do exactly what they're told, when they're told to do it, looking only at preprogrammed parameters for guidance and ignoring any broader context that the designer may have overlooked. And when you consider the complexity of the market, I guarantee that there's a lot of parameters that the implementors of these programs have overlooked.

Are we lost in space, with Dave the astronaut pleading, “Open the bank vault doors, Hal.”?

(link) [New York Times]

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