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"People tend to assume that algorithms are faster and better decision-makers than human traders,” said Mark Lemley ... “That may often be true, but when it’s no
by eyeundersand 7y ago
"People tend to assume that algorithms are faster and better decision-makers than human traders,” said Mark Lemley ... “That may often be true, but when it’s not ..."
Is it just me or is that quote kind of disingenuous? "People tend to assume" and "That may OFTEN be true" make it sound like it isn't as clear cut or there's still doubt over whether such algorithms outperform humans.
Is that truly the case? I don't know much about trading but aren't algorithms doing most of the trading now?
- Nasrudith 7y agoThe faster part is certainly not a matter of debate. The better less so and it depends a lot on the area. High Frequency Trading they essentially dominate and given what I heard also really prove their role's legitimacy as arbitrage as more HFT bots drove down the margins in a move towards uniformity - just like arbitrage should. They are prone to some occasional "dumb" errors however - like humans but different those which attempt to predict trends using feeds like Twitter have caused losses as they fail to get the context. And it depends on the area and how you define algorithm and trading. Your bank has lists of requirements for mortgages beyond legal minimums - essentially already following an algorithm but due dilligence involves humans in the loop.
- eyeundersand 7y agoThank you for the insight! Much appreciated.