Algorithmic Trading is Not High Frequency Trading September 13, 2011 It’s not every day I come across a widely-shared article whose first sentence is factually incorrect, but a 9/9/11 story in Computerworld UK, “Algorithmic stock trading rapidly replacing humans, warns government paper”, is just such a creature. The first sentence begins, “Algorithmic trading, also known as high frequency trading (HFT), is rapidly replacing human decision making, according to a government panel…” Problems “Algorithmic trading, also known as high frequency trading (HFT)” — no, algorithmic trading and HFT are not the same. The Difference Between Algorithmic Trading & HFT Algorithmic trading is like the GPS navigation system in your car: you tell the car your destination, and the GPS picks the route. High frequency trading is a different game. In short, algorithmic trading is used to implement large scale, economic views on asset prices, whereas HFT systems place automated, small scale, probabilistic bets on structural inefficiencies. Scary HFT Addendum Home ↑
New study says birds learn how to build nests 26 September 2011Last updated at 00:01 Footage of southern masked weaver birds formed the basis of the study A new study has found birds learn the art of nest-building, rather than it being just an instinctive skill. Researchers from Edinburgh, Glasgow and St Andrews Universities studied film of southern masked weavers recorded by scientists in Botswana. This colourful species was chosen because individual birds build many complex nests in a season. Dr Patrick Walsh of Edinburgh University said the study revealed "a clear role for experience". The research has been published in the Behavioural Processes journal. Individual birds varied their technique from one nest to the next and there were instances of birds building nests from left to right as well as from right to left. As birds gained more experience, they dropped blades of grass less often. "If birds built their nests according to a genetic template, you would expect all birds to build their nests the same way each time.
[2011] Man vs. Machine on Wall Street: How Computers Beat the Market - Business Wall Street, meet your post-human future. Uber-"quant" Cliff Asness bets that his high-speed computers and trading models can churn billions of dollars in profits in booms and busts alike. But can artificial intelligence really out-smart the market? With the winter's second blizzard raging outside, Cliff Asness sat in his relatively modest office in Greenwich, Connecticut, surrounded by three of his partners, his PR guru, an impressive collection of unread books, and a sea of foot-tall hard-plastic replicas of Spiderman, the Incredible Hulk, and friends. "Let me be technical," he said. "It all sucked." Asness--intense, bald, and bearded, with a $500 million fortune and a doctorate in finance--was reflecting on the dark days of 2008, when capitalism seemed to be imploding, when Bear Stearns and Lehman Brothers had collapsed and the government had hastily arranged bailouts of Merrill Lynch, Morgan Stanley, Goldman Sachs, and AIG, among others. Yet they survived.
Women on pill remember things differently It looked at how women on the contraceptive pill or experiencing natural hormonal cycles remembered a car accident involving a mother and son. Women using hormonal contraceptives for as little as one month remembered more clearly the main steps in the traumatic event - that there had been an accident, that the boy had been rushed to the hospital, that doctors worked to save his life and successfully reattached both his feet, for instance. Women not using them remembered more details, such as a fire hydrant next to the car. Shawn Nielsen, a graduate researcher involved in the study, said those who use contraceptives like birth control pills remember the gist of an emotional event while women not using the contraceptives better retain details. She stressed that the medications did not damage memory, adding: "It's a change in the type of information they remember, not a deficit." "What's most exciting about this study is that it shows the use of hormonal contraception alters memory.
Goodbye High Frequency Trading - Regulators Seek Secret HFT Codes The crusade against High Frequency Trading which Zero Hedge started well over two years ago, is now coming to an end. Reuters reports that U.S. securities regulators have "taken the unprecedented step of asking high-frequency trading firms to hand over the details of their trading strategies, and in some cases, their secret computer codes." As everyone knows, the only thing of value within the sub-penny scalping HFT universe are the odd nuances in computer code. Which is why its supreme and undisputed secrecy is sacrosanct. More from Reuters: The requests for proprietary code and algorithm parameters by the Financial Industry Regulatory Authority (FINRA), a Wall Street brokerage regulator, are part of investigations into suspicious market activity, said Tom Gira, executive vice president of FINRA's market regulation unit. It's all in the code: At that point the stage for restoration of normalcy will finally be set.
Reindeer body clock switched off Reindeer have to survive the light polar summer and dark polar winter Reindeer have no internal body clock, according to scientists. Researchers found that the animals are missing a "circadian clock" that influences processes including the sleep-wake cycle and metabolism. This enables them to better cope with the extreme Arctic seasons of polar day, when the sun stays up all day, and polar night, when it does not rise. The team from the universities of Manchester and Tromso report their study in Current Biology journal. The body clock, or circadian clock, is the internal mechanism that drives hormone release on a rhythmic 24-hour cycle. Light also influences these hormonal rhythms, but in most mammals, this "circuit" also involves the circadian clock, which can influence the release of hormones without the influence of light. Anyone who has experienced jet lag is familiar with the effect of the body clock. Professor Andrew Loudon from The University of Manchester took part in the study.
Exclusive: Regulators seek trading secrets Fish living in dark caves still feel the rhythm of life 10 September 2011Last updated at 02:17 By Leila Battison Science reporter Millions of years of evolution in the dark have led to this Somalian cavefish losing its eyes, scales, and pigmentation. A blind, cave-dwelling fish in Somalia knows what time it is, but its "day" is twice as long as ours. Most animals have an internal body clock, or circadian rhythm, that lasts around 24 hours and is modified by the light-dark cycle of a day. But an international team, whose research is published in the open access journal PloS Biology, shows that certain blind cave fish have a circadian rhythm that lasts almost two days. The cavefish, Phreatichthys andruzzii, has evolved for nearly two million years in the isolated darkness of caves beneath the Somali desert. Professor Nick Foulkes, of the Karlsruhe Institute of Technology in Germany, said that this particular species was chosen "because it was such an extreme example, having been isolated from a day-night cycle for so long". Light sensitivity
High-Frequency Trading Is Evil, Right? Not So, Says the BIS - The Source By Eva Szalay Everyone knows that high-frequency traders are the evil geniuses of the foreign-exchange market, right? They damage liquidity, swoop aggressively on tiny price errors, curdle milk with their oh-so-fancy computers and generally make the market harder for everyone to navigate. That’s what their detractors say. But the Bank for International Settlements, no less, doesn’t seem to agree. A new study by the BIS, based on research from officials at some 14 central banks, says that high-frequency traders (or HFTs in market speak) smooth out currency movements, help spread liquidity around this fragmented market and help to make trading cheaper for everyone. HFTs do raise big questions, the BIS said. Still, why do we only ever hear bad things about them? The BIS says this: “[Banks'] views on the role of HFT firms tend to vary, depending on whether they are courting business from [these clients].
Supercomputer predicts revolution 9 September 2011Last updated at 15:57 Sentiment mining showed a sharp change in tone around Egypt ahead of President Mubarak's ousting Feeding a supercomputer with news stories could help predict major world events, according to US research. A study, based on millions of articles, charted deteriorating national sentiment ahead of the recent revolutions in Libya and Egypt. While the analysis was carried out retrospectively, scientists say the same processes could be used to anticipate upcoming conflict. The system also picked up early clues about Osama Bin Laden's location. Kalev Leetaru, from the University of Illinois' Institute for Computing in the Humanities, Arts and Social Science, presented his findings in the journal First Monday. Mood and location The study's information was taken from a range of sources including the US government-run Open Source Centre and BBC Monitoring, both of which monitor local media output around the world. Predicting trouble Continue reading the main story
Risk from High Frequency and Algorithmic Trading Not as Big as Many Think Skynet begins to learn, at a geometric rate.It becomes self-aware at 2:14 a.m. eastern time, August 29.In a panic, they try to pull the plug.-- Terminator 2 There is a general view that one way or another the end result of all the high frequency and algorithmic trading will be a blowup. But I don’t think the risk is as big as many are making it out to be. First, let me point out the difference between high frequency trading and algorithmic trading. High frequency trading is a type of proprietary trading. Algorithmic trading uses computer algorithms to facilitate trade execution. One way to do it is to put a ten thousand lot buy order into the market. Is this author on the ball? Follow and be the first to know when they publish. Follow Richard Bookstaber (131 followers) (You’ll be notified by email with new articles from your favorite authors.) New! Follow these related stocks (Click to add stocks to your portfolio) Share this article with a colleague
Rodin's Thinker cast vandalised in Argentina 9 September 2011Last updated at 12:51 The sculpture is a popular tourist attraction in Buenos Aires A cast of Auguste Rodin's famous The Thinker sculpture has been vandalised in Buenos Aires. The bronze work, which is the third of 22 sculptures from the original mould, was spray-painted pink and given green hair and a shoulder tattoo. Last week government officials began cleaning the sculpture, blasting it with water to remove the paint. However art conservationists are now concerned it may have suffered more damage from the aggressive technique. Considered a masterpiece of late 19th century art, The Thinker is the French sculptor's most recognisable work. Exhibited on a plinth in the main square in the Argentinian capital, in front of the national congress building, the sculpture is a popular tourist attraction in the city. Patina damage The bluish-green patina that forms on the surface of bronze objects over time, due to oxidation, gives the metal artwork its unique look.
"It's Not A Market, It's An HFT 'Crop Circle' Crime Scene" - Further Evidence Of Quote Stuffing Manipulation By HFT Recently we posted a required reading analysis by Nanex in which the market trading analytics firm presented irrefutable evidence of quote stuffing by HFT algorithms in tens of stocks, in which thousands of cancelled quotes would reappear each second with a definitive periodicity and regularity, around the time of the May 6 flash crash. Aside from the fact that it is illegal to indicate a quote without a trade intent, this form of quote stuffing is in fact manipulative when conducted by HFT repeaters in specific "shapes" as it actually moves the NBBO actively higher or lower, in cases pushing the bid/offer range up to 10% higher without even one trade ever having occurred, simply by masking a big block order which other algos interpret as bid interest and pull all offers progressively or step function higher (or vice versa, although we have rarely if ever seen the walking down of a stock over the past 18 months). 07-29-10 "The Crown". 07-28-10 BATS "Batsicles". h/t Dan