Mostly… fixed income and cross product eTrading

May 8, 2007


Filed under: 2015, Algos, etrading — holky @ 12:35 pm

The machines are taking over the world!

Bloomberg article on “machine outwitting humans” and AI in the algo space says Language represents one of the biggest gulfs between human and computer intelligence, Dhar says. Closing that divide would mean big money for Wall Street, he says. Unlike computers, human traders and money managers can glimpse a CEO on television or glance at news reports and sense whether news is good or bad for a stock. In conversation, a person’s vocal tone or inflection can alter — or even reverse — the meaning of words. Let’s say you ask a trader if he thinks U.S. stocks are cheap and he responds, “Yeah, right.” Does he mean stocks are inexpensive or, sarcastically, just the opposite? What matters is not just what people say, but how they say it. Traders also have a feel for what other investors are thinking, so they can make educated guesses about how people will react.

So there you have it – the human value-add comes down to making “educated guesses”.

What if the other end of the conversation (/information flow) is a machine, and there is no vocal tone to interpret?  Are we expecting machines to also utilise sarcasm in their responses?



  1. Educated guesses? Sheeez, when I was in Funds Management we called it Judgmental Overlay!!!! Sounds much better. 🙂

    Comment by waratah — May 8, 2007 @ 12:48 pm

  2. Of course long term strategic investment is more open to “judemental overlay” .. as the absolute proof of whether that punt, er “judgemental overlay”, was right or not is much farther away than the trading world algo robots are taking over as discussed in the panel discussion in

    Comment by holky — May 8, 2007 @ 1:01 pm

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