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September 17 2013

The secret financial market only robots can see – Quartz

The secret financial market only #robots can see – Quartz
http://qz.com/124721/the-secret-financial-market-only-robots-can-see

In a new paper called “Abrupt rise of new machine ecology beyond human response time,” researchers found a new trading ecosystem that humans don’t even notice.

http://qzprod.files.wordpress.com/2013/09/srep02627-f1.jpg?w=600&h=494

People can’t really respond to stimuli much faster than in one second. The benchmark comes from cognitive scientists who find that it takes 650 milliseconds for a chess grandmaster to realize that a king has been put in check after a move. Below that time period, you can find “ultrafast extreme events,” or UEEs, in which trading algorithms cause prices to change by 0.08% or more before returning to human-time market prices. This appears to be the case when many simple algorithms, operating on limited information, pile into a single trade.

#temps #finance #trading_hf

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