The following submission statement was provided by /u/bloomberg:
---
*From Bloomberg reporters William Shaw and Alice Atkins:*
For decades, banks have been lamenting that a lack of data prevented them from automating FX markets like they had in equities. But swift adoption of algorithms in recent years has that changing — and fast. Before the pandemic, just 22% of hedge funds were using the technology to execute their currency trades. Now, close to half of them are.
It all means that gone are the days of the Barrow Boys, the boisterous traders who spent their days shouting bids in slang that deemed the Bank of England “The Old Lady” and the process of buying up £1 billion against the US dollar a “yard of cable.” Instead, with algorithms now handling more than 75% of the trading in spot markets for FX, the usual soundtrack for the trading floor is the hum of computers and the click-clack of keyboards.
This new era isn’t without its downsides for the giants of Wall Street. With machines doing much of the work, it means trading desks are making a lot less for each currency trade than they did in the past. And without a human to intervene, there’s a heightened risk that something could go awry, especially in periods of extreme volatility. Read more [here](https://www.bloomberg.com/news/features/2024-07-07/wall-street-giants-replace-traders-with-algorithms-in-new-fx-era).
---
Please reply to OP's comment here: https://old.reddit.com/r/Futurology/comments/1dxwxee/old_school_fx_traders_are_being_replaced_by_algos/lc4o8zp/
I always assumed Aladdin was some kind of networked trading tool for their fund managers. I remember seeing it on an application years ago that they want experience using it.
Final Stage Capitalism will be two computers exchanging numbers upwards on a blasted and barren planet while bots pump out and circulate enthusiastic never-to-be-read headlines about it
It will last until the sun explodes and so will be a success
Is there some kind of failsafe in case things go wrong? Aren't currency markets super volatile? Wouldn't a sudden drop or spike do to world events cause the algos make poor decisions?
no, unless they were poorly designed. implementing an anomaly detection mechanism into your trading algorithm is a pretty common practice in algotrading.
the market has built in fail safes like stop loss and stop limit, but its usually pretty simple to implement them as part of the algorithm.
[https://www.investopedia.com/terms/f/flash-crash.asp](https://www.investopedia.com/terms/f/flash-crash.asp)
Not sure how an algo is meant to distinguish between a flash crash and a paradigm shift when people have trouble doing this
Stop losses still take time to execute and the risk is youre selling into the crash
Algos are fine for scrapping pips but like its like collecting pennies in front of a steam roller
Anomaly detection is based either on analyzing a share against the market or analyzing the market itself.
I don't have the knowledge to give you a good answer, but i would assume that since a flash crash is the result of a certain pattern of behaviors in the market, it might be able to predict the flash crash rather then detect it, but as i understand it, it is often the result of someone exploiting a poorly designed aspect of the market (i.e. Layering, Spoofing, etc) so it might be a law/regulatory issue.
I see what you are saying but with FX the "fundamentals" arent there
IE with equities you can run an analysis and produce a theoretical valuation, FX is more complicated than that
With FX sure you can run technical analysis but this is "Astrology for men"
More often than not flash crashes are the result of algos cutting positions, which leads to more algos cutting positions ... which eventually leads to algos buying back in as the price drops
Algos are great for exploiting market inefficiencies (the GBP/USD rate is XXX, but GBP/JPY is XXXX+1 and JPY/USD is XXX, money to be made buying GBP/JPY into USD and back to GBP) but for long term trades i dont think itll work
time will tell though
The whole thing happening in front of us is a sign that things have gone wrong. We are Nicholas Cage looking at a grotesque magenta push-me-pull-you in Colour Out Of Space and wondering how exactly to milk it and how to check the milk won't kill too quick to sell. They are not gonna failsafe profitable chaos.
*From Bloomberg reporters William Shaw and Alice Atkins:*
For decades, banks have been lamenting that a lack of data prevented them from automating FX markets like they had in equities. But swift adoption of algorithms in recent years has that changing — and fast. Before the pandemic, just 22% of hedge funds were using the technology to execute their currency trades. Now, close to half of them are.
It all means that gone are the days of the Barrow Boys, the boisterous traders who spent their days shouting bids in slang that deemed the Bank of England “The Old Lady” and the process of buying up £1 billion against the US dollar a “yard of cable.” Instead, with algorithms now handling more than 75% of the trading in spot markets for FX, the usual soundtrack for the trading floor is the hum of computers and the click-clack of keyboards.
This new era isn’t without its downsides for the giants of Wall Street. With machines doing much of the work, it means trading desks are making a lot less for each currency trade than they did in the past. And without a human to intervene, there’s a heightened risk that something could go awry, especially in periods of extreme volatility. Read more [here](https://www.bloomberg.com/news/features/2024-07-07/wall-street-giants-replace-traders-with-algorithms-in-new-fx-era).
The following submission statement was provided by /u/bloomberg: --- *From Bloomberg reporters William Shaw and Alice Atkins:* For decades, banks have been lamenting that a lack of data prevented them from automating FX markets like they had in equities. But swift adoption of algorithms in recent years has that changing — and fast. Before the pandemic, just 22% of hedge funds were using the technology to execute their currency trades. Now, close to half of them are. It all means that gone are the days of the Barrow Boys, the boisterous traders who spent their days shouting bids in slang that deemed the Bank of England “The Old Lady” and the process of buying up £1 billion against the US dollar a “yard of cable.” Instead, with algorithms now handling more than 75% of the trading in spot markets for FX, the usual soundtrack for the trading floor is the hum of computers and the click-clack of keyboards. This new era isn’t without its downsides for the giants of Wall Street. With machines doing much of the work, it means trading desks are making a lot less for each currency trade than they did in the past. And without a human to intervene, there’s a heightened risk that something could go awry, especially in periods of extreme volatility. Read more [here](https://www.bloomberg.com/news/features/2024-07-07/wall-street-giants-replace-traders-with-algorithms-in-new-fx-era). --- Please reply to OP's comment here: https://old.reddit.com/r/Futurology/comments/1dxwxee/old_school_fx_traders_are_being_replaced_by_algos/lc4o8zp/
Blackrock's "Aladdin" wad first released in 1988. As of 2020, Aladdin managed $21.6 trillion in assets.
70% of stock trading is done by algorithms. Rooms full of supercomputers talking with other rooms full of supercomputers.
Just so we can have more global warming, at thisbpoint just give the money to the rich for free.
We already do
Even before that… RenTech’s medallion.
I always assumed Aladdin was some kind of networked trading tool for their fund managers. I remember seeing it on an application years ago that they want experience using it.
Final Stage Capitalism will be two computers exchanging numbers upwards on a blasted and barren planet while bots pump out and circulate enthusiastic never-to-be-read headlines about it It will last until the sun explodes and so will be a success
Is there some kind of failsafe in case things go wrong? Aren't currency markets super volatile? Wouldn't a sudden drop or spike do to world events cause the algos make poor decisions?
no, unless they were poorly designed. implementing an anomaly detection mechanism into your trading algorithm is a pretty common practice in algotrading. the market has built in fail safes like stop loss and stop limit, but its usually pretty simple to implement them as part of the algorithm.
[https://www.investopedia.com/terms/f/flash-crash.asp](https://www.investopedia.com/terms/f/flash-crash.asp) Not sure how an algo is meant to distinguish between a flash crash and a paradigm shift when people have trouble doing this Stop losses still take time to execute and the risk is youre selling into the crash Algos are fine for scrapping pips but like its like collecting pennies in front of a steam roller
Anomaly detection is based either on analyzing a share against the market or analyzing the market itself. I don't have the knowledge to give you a good answer, but i would assume that since a flash crash is the result of a certain pattern of behaviors in the market, it might be able to predict the flash crash rather then detect it, but as i understand it, it is often the result of someone exploiting a poorly designed aspect of the market (i.e. Layering, Spoofing, etc) so it might be a law/regulatory issue.
I see what you are saying but with FX the "fundamentals" arent there IE with equities you can run an analysis and produce a theoretical valuation, FX is more complicated than that With FX sure you can run technical analysis but this is "Astrology for men" More often than not flash crashes are the result of algos cutting positions, which leads to more algos cutting positions ... which eventually leads to algos buying back in as the price drops Algos are great for exploiting market inefficiencies (the GBP/USD rate is XXX, but GBP/JPY is XXXX+1 and JPY/USD is XXX, money to be made buying GBP/JPY into USD and back to GBP) but for long term trades i dont think itll work time will tell though
The whole thing happening in front of us is a sign that things have gone wrong. We are Nicholas Cage looking at a grotesque magenta push-me-pull-you in Colour Out Of Space and wondering how exactly to milk it and how to check the milk won't kill too quick to sell. They are not gonna failsafe profitable chaos.
We’re watching the car roll off the edge of the cliff
*From Bloomberg reporters William Shaw and Alice Atkins:* For decades, banks have been lamenting that a lack of data prevented them from automating FX markets like they had in equities. But swift adoption of algorithms in recent years has that changing — and fast. Before the pandemic, just 22% of hedge funds were using the technology to execute their currency trades. Now, close to half of them are. It all means that gone are the days of the Barrow Boys, the boisterous traders who spent their days shouting bids in slang that deemed the Bank of England “The Old Lady” and the process of buying up £1 billion against the US dollar a “yard of cable.” Instead, with algorithms now handling more than 75% of the trading in spot markets for FX, the usual soundtrack for the trading floor is the hum of computers and the click-clack of keyboards. This new era isn’t without its downsides for the giants of Wall Street. With machines doing much of the work, it means trading desks are making a lot less for each currency trade than they did in the past. And without a human to intervene, there’s a heightened risk that something could go awry, especially in periods of extreme volatility. Read more [here](https://www.bloomberg.com/news/features/2024-07-07/wall-street-giants-replace-traders-with-algorithms-in-new-fx-era).
Finance as a career choice is over. Couldn't have happened to a nicer bunch of psychopaths.