Saturday, April 25, 2009

Quants? Arh?

The way program trading works is ... I don't know. Do I work for the Lime Group?

My search for the roots of quant program trading, or whatever people like to call it, began today. I'm interested because the stock market has spiked up enormously in the final minutes of six of the last eight sessions. It's all because of program trading. The monster titan of such things is Lime Group and here's a story that touches on what Lime is about. Quite interesting and varied, and somehow I'm not surprised that the founder has a passion for improving his city. In fact, the story notes that he's a friend of Enrique Penalosa, the former mayor of Bogota who was featured on E2, one of my favorite TV programs.

Anyway, I may hate it when program trading causes one of my stocks to freefall, and I may love it when program trading causes one of my stocks to spike up. It is what it is and I want to know more about it. Program trading was just 5 percent of the NASDAQ volume a decade ago. Now it is 40 percent. That cannot be ignored.

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