Investors scared of the rise of quant trading

(Last Updated On: May 24, 2017)

Investors scared of the rise of quant trading

First they can be scared b/c they fear what they don’t know

They are right. Extra leverage means extra risk in the market for extra juicing. Maybe I should find a new line of work

It seems algos are programmed with a bias to buy. Individual stocks have risen to ludicrous levels that leave rational humans scratching their heads. But since everything always goes up, and even small dips are big buying opportunities for these algos, machine learning teaches algos precisely that, and it becomes a self-propagating machine, until something trips a limit somewhere.

And suddenly things happen that weren’t part of the scenario. To deal with it, the machines, perhaps in lockstep, revert to a part of the code that says “sell.” Plunging markets trigger more sell signals, and so on. And in this paroxysm of selling by the machines, there might not be enough human traders left—they’ve been sent to pasture years ago—to jump in and buy. Sure, it cannot happen, we’re told. Until it does happen.

 

http://www.marketwatch.com/story/should-investors-be-worried-about-the-rise-of-the-quants-2017-05-23

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About caustic

Hi i there My name is Bryan Downing. I am part of a company called QuantLabs.Net This is specifically a company with a high profile blog about technology, trading, financial, investment, quant, etc. It posts things on how to do job interviews with large companies like Morgan Stanley, Bloomberg, Citibank, and IBM. It also posts different unique tips and tricks on Java, C++, or C programming. It posts about different techniques in learning about Matlab and building models or strategies. There is a lot here if you are into venturing into the financial world like quant or technical analysis. It also discusses the future generation of trading and programming Specialties: C++, Java, C#, Matlab, quant, models, strategies, technical analysis, linux, windows P.S. I have been known to be the worst typist. Do not be offended by it as I like to bang stuff out and put priorty of what I do over typing. Maybe one day I can get a full time copy editor to help out. Do note I prefer videos as they are much easier to produce so check out my many video at youtube.com/quantlabs