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Interesting question. What if HFT algorithms become so efficient they are able to easily out-compete human trading decisions, such that humans exit the system a
by _sh 15y ago
Interesting question. What if HFT algorithms become so efficient they are able to easily out-compete human trading decisions, such that humans exit the system altogether? What if the stock exchange becomes exclusively HFT algorithms competing against eachother on behalf of large funds, such that being a 'trader' is all about which fund to put money into (which algorithm suite to back)?
In such a thought experiment, what if the algorithms discovered more money could be realized by trading on a vector different to 'the current/future worth of a company'? Say a genetic algorithm determined that whether the share price ended the week's trading on an odd number rather than an even number is more important for predicting the future direction of the price on Monday. In the world of genetic algorithms, stranger shit has happened. What impact would this have?
I don't know much about trading, particularly HFT, so I don't even know if this is possible or realistic. I do love thought experiments though, and believe that HFT algorithms are currently trying to predict human responses to market events and act accordingly. Just wondered what would happen if they dominate a market such that human influence is negligible. So yeah, interesting question.