Many pundits say that the recent stock market volatility and steep decline are at least partially attributable to algorithmic trading … complex analytical models with decision rules executed in real time by computers … think: flash trading.
The current relevance prompted me to flashback to a very cool 15 minute TED Talk … my all time favorite.
In the talk, tech entrepreneur Kevin Slavin tells how algorithms have reached across industries and into every day life.
A couple of lines caught my attention:
- There are more than 2,000 physicists working on Wall Street developing operational algorithms
- Massive scale speed trading is dependent on millisecond read & respond rates …
- So, firms are physically literally locating right next to internet routing hubs to cut transmission times … or, setting up shop right at the exchanges.
- And, of course, there isn’t time for human intervention and control
- “We may be building whole worlds we don’t really understand, and can’t control.”
Obviously, Slavin comes down on the side of the quants.
It’s worth listening to this pitch … a very engaging geek who may be onto something big.
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