Hedge Funds To Boost Use Of Trading Algorithms For Stocks, Tabb Group Says

Bloomberg:

Asset managers such as hedge funds will probably increase their use of computer programs known as algorithms to execute their stock trades in 2011, according to securities-industry research firm Tabb Group LLC.

The proportion of orders processed by algorithms will probably amount to 35 percent next year, up from 29 percent in 2010, according to a report from Tabb analyst Cheyenne Morgan and director of research Adam Sussman. Human traders at broker- dealers will execute 35 percent of orders in 2011, down from 39 percent this year, the report said.

Read the whole story: Bloomberg

Comments

[angrymanspokane]

10:28 AM on 07/20/2010

Brilliant! Let's keep finding new ways to make ourselves obsolete.

[Y3rMawm]

07:13 PM on 07/19/2010

How long before Skynet becomes self aware?

[angrymanspokane]

10:28 AM on 07/20/2010

You beat me to it, nice.

[Y3rMawm]

12:28 AM on 07/21/2010

lol...must give credit, where witty credit is due. Cipo beat me to it :)

[FoonTheElder]

02:34 PM on 07/19/2010

To err is human, it takes a computer to real foul up things.

[Cipo]

11:52 AM on 07/19/2010

Someone on the HP, some time ago, post a link to this article written by Mark Cuban on exactly what business Wall St is in. I thought it was a wonderful explanation and very much dove-tails with this article: http://www.businessinsider.com/what-business-is-wall-street-in-2010-5

[steppenwolfsayshi]

11:11 AM on 07/19/2010

This stuff is bad news. WallStreet is increasingly making money by cute tricks, not by investing money in companies anymore. They want to just make a few dollars here and there every second, rather than bothering trying to pick winning companies, giving them cash to run and sticking their neck out in case the business fails-which USED to be called investing.

[Flying Sparkz1]

11:05 AM on 07/19/2010

There have been red flags about the use of trading algorithms for years. The use of these devices can be far more devastating to the economy than insider trading. They are legalized skimming and contribute nothing to the real value of the economy. It's just illustrates further what an irresponsible con game capitalism is. Read "Capital" by Karl Marx. Or check out this link.

http://comment.rsablogs.org.uk/videos/

[northstar11]

10:39 AM on 07/19/2010

future ads
my brokers program is better than your brokers program ------

i go with expresso traders -------their program is number one -

nanno seconds----not nanno minutes ------fast, impersonal and profitable

[R307Johnson]

10:38 AM on 07/19/2010

May the great brains of Wall Street finally discover what it is like to have your entire industry taken over by computers and then have the traders outsourced to INDIA. They thought is was so great that the stocks shot way up when over 3000 of us were laid off for that. It's time to look into the mirrors and decide if corporate dividends are worth all the effort.

[cgeorgan]

09:42 AM on 07/19/2010

PS What this article doesn't mention is that groups of human traders are merely being replaced by fewer traders - albeit those who are more adept with computers and electronics.

It still takes several humans to oversee the algorithms themselves.

[Cipo]

11:53 AM on 07/19/2010

Until SkyNet becomes self-aware............:)

[Y3rMawm]

07:16 PM on 07/19/2010

Sorry Super Mario...didn't see your post before I put mine up. /Hat Tip

[cgeorgan]

09:40 AM on 07/19/2010

I mourn the outsourcing of these high-paying Wall Street jobs. Pushing buttons day after day used to be the road to the upper class for many newly minted Ivy-league grads. Now these quality jobs are being given to machines. Where is the administration in all this?

[ILibertine]

09:24 AM on 07/19/2010

Think this is a problem? Wait until computer "algorihms" determine foreign policies. So much has been lost with the elimination of nuance and knowledge of people in the conducting of business affairs that explains much about the state of the nation, and world. When systems cede their objectivity to "programs", the results may be predictably analytical, but only on the basis of input.

[totaldisbelief]

09:17 AM on 07/19/2010

so Robots will really rule the world.

[Cipo]

11:54 AM on 07/19/2010

Of the entire US money supply; only 3% exists as actual physical currency.

[floodmfx]

09:07 AM on 07/19/2010

Human traders might have ethical and moral baggage -
computers are better suited for that business

[Cipo]

11:55 AM on 07/19/2010

Traders have ethics and morals? I don't believe it.

[jayes]

08:56 AM on 07/19/2010

someone still has to watch the programs and feed them their input.

doing nothing is the same as choosing a bunch of stocks and sticking the certificates in a drawer. cr@pshoot.

in the deepest of my benevolent heart, i wish hedge funds and wall-street the best of luck. crash.

[Sundialsvc4]

08:45 AM on 07/19/2010

Merely consider how "The New York Stock Exchange, Inc." considers your daily news report ...

(Insert the sound effect that the Charlie Brown movies always used for any adult ...)

"Stocks closed WA-WA-WA-WA-WA today on a volume of LISTEN TO THIS NUMBER ONLY shares."

After all ... they sell exactly one thing: "transactions." For so-many cents apiece. That's it. That's all.

A programmed trading machine will generate thousands more transactions per day than a human trader literally could. That greatly improves the profit margins of the exchanges. (Who cares what happens to you?)

[Flying Sparkz1]

11:08 AM on 07/19/2010

So true, win or lose, buy or sell, the markets make money.