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Nanosecond Trading Could Make Markets Go Haywire

The stock market has always been fast-paced, but with the introduction of automated trading, the speed of routine transactions has increased far beyond human capacity to keep up, creating a host of new dangers. New “programs are designed to trade enormous volumes of stocks, bonds and other financial instruments at superfast speeds, taking advantage of second-to-second fractional price shifts and market trends,” reports Brandon Keim for Wired. “Flash crashes” – sharp, rapid dips and recoveries in the market happen everyday at alarming frequency, leading some experts to question whether automated trading is financially stable and whether a large-scale crash could occur as a result of constant stress on the market. Differences in cross-border trades and regulation are a particular concern. The algorithms operate in fractions of a second, so millions of trades can be made before any human could possibly respond. – YaleGlobal

Nanosecond Trading Could Make Markets Go Haywire

New algorithms lend speed to automatic trading at the cost of human analysis, adding volatility to global stock markets
Brandon Keim
Wired, 22 February 2012
Click here for the article in Wired.
Source:Wired
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