Stock Traders Being Replaced by Robots

#Money

Wed, Jan 12th, 2011 10:00 by capnasty NEWS

Here's a job I didn't think would be taken away by machines: stock trading. Reportedly, the Dow Jones provides a service called Lexicon: it has completely automated the process of reading stock trading news. From these news it is capable of finding textual clues of stock's behaviour before feeding this information to it's subscriber base, made mostly of robots. Lexicon can read every single Dow Jones news items and is able to do this in real time.

The robots on the other end -- more like computers running sophisticated software -- crunch these numbers and, more often than not, actually make decisions on what to buy or sell. From the article:

That increasingly describes the entire financial system. Over the past decade, algorithmic trading has overtaken the industry. From the single desk of a startup hedge fund to the gilded halls of Goldman Sachs, computer code is now responsible for most of the activity on Wall Street. (By some estimates, computer-aided high-frequency trading now accounts for about 70 percent of total trade volume.) Increasingly, the market?s ups and downs are determined not by traders competing to see who has the best information or sharpest business mind but by algorithms feverishly scanning for faint signals of potential profit.

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