tag:blogger.com,1999:blog-5688599.post2546166621161711881..comments2023-10-12T04:54:05.108-07:00Comments on Deep Freeze 9: Algorithmic trading changes markets (maybe)JP (Pierre) de Vrieshttp://www.blogger.com/profile/02311009024575927588noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5688599.post-80878495175819633022007-04-12T23:50:00.000-07:002007-04-12T23:50:00.000-07:00At certain scales/tempos/degrees of connectedness ...At certain scales/tempos/degrees of connectedness one cannot treat the environment as a static, stable system following some constant laws, and then build plans/products based on that. For human scale trading (other than for major market makers) the environment in which traders operate is independent of their actions. It can be viewed as "classical"; you have time to publish books about it that others will read and find useful. But at large scales and with automated trading that can make significant changes very fast, the environment starts changing significantly and rapidly through the agents interacting with it. This leads to the tightening of the evaluation/testing cycle, changing the market again. I do think right now the change is quantitative right now, but it is accelerating with such speed that I think it will likely lead to some qualitative shift in the near future.<BR/><BR/>In a different realm, start-up companies can operate as if their environment doesn’t depend on their actions, but large companies change their environment by interacting with it.<BR/><BR/>And a step further still, we are starting to consider, and learn about, a feedback loop that runs at a much faster rate. The human mind, amplified with powerful new skills and tools, is starting to directly affect both the environment that it operates in and its underlying physical structure, leading in turn to changes in itself. For now this change can be viewed as quantitative, but I think it will lead to some phase shift, to some new paradigm that I just don't have enough intelligence and imagination to consider yet. I do have a feeling that this will happen on both the personal level, people taking charge of their own growth and evolution during their lifetimes, and on the planetary level. Humanity will enter into a feedback loop with its environments (markets, economy, physical space) by using science/computing/technology/policy. It will recognize its power to affect the world around it, and in turn its own evolution, and not simply be reactive to the environmental changes it had until then perceived as static and outside of its control.<BR/>-- KyrilAnonymousnoreply@blogger.com