Bank & Finance Watch

They are working on AVIDA right over here at Michigan State University

You know, I've one some models with very simple agent based modelling tools, like NetLogo, that have made some amazingly accurate predictions about things, like wealth distribution, hoarding vs. spending and/or sharing etc You can use surprisingly simple tools to test models, so long as you can see Simple Rules in complex data sets. It is the simple rules that make predicting complex behavior possible

Sam Rose Social Synergy Web Weblog

Gordon Gekko makes way for trading software

30 May 2007, NewScientist.com news service, Robert Matthews

BRAD BAILEY was visiting the trading floor of an investment bank in New York City when he first noticed it. As a former Wall Street trader, he should have felt at home amid all the screens, phones and bustle of billions of dollars in trades. But that was just it: there wasn't any bustle. In fact, there were hardly any traders. "You could hear a pin drop," he recalls. Then it sank in: machines had taken over the role of people and computer servers don't make any noise.

There's a quiet revolution happening all over the financial world. Gone are the days of Gordon Gekko lookalikes screaming obscenities and dumping a loss-making stock onto an unsuspecting market. Investors have realised that the processing speed and sheer volume of trades a computer can make can help them to outwit the sharpest of dealers. As a result, they are investing heavily in what has fast become an arms race between investors. Their goal is to develop the best "algorithmic trading" systems - software that helps decide which trades are the most profitable, and then does the deals. Ten years ago, algo-trading was almost non-existent, but according to a recent report by Bailey, now at the Boston-based consulting firm Aite Group, one-third of all trading decisions in US markets are now made by machines. He predicts that by 2010 more than half will be done this way. At Deutsche Bank in London, over 70 per cent of a category of foreign currency trades, called "spot trades", are now carried out without human intervention every day. All this will have an impact on more than just high-rolling investors. Even if you don't own any shares you can bet that millions of those owned by your pension fund are already being bought and sold using "algo" trading techniques.