Algorithmic Trading

  

You might take this as a sign that a Terminator-style dystopia is just around the corner, but robots (or at least artificially intelligent agents) are alive and well on Wall Street. These devices work by a process called algorithmic trading.

An algorithm is just a formula. As in "when a stock gets to ___, start buying it. Stop buying it when it gets to ___ and hold it until it gets to ___, then sell."

Actually, you don't need to join the anti-Skynet resistance just yet. Until the computers achieve self-awareness and become sentient, there is still a place for people in algorithmic trading.

Computers have diminished the need for people yelling at each other on the floor of the stock exchanges. But they've also increased the need for computer programmers, who don't trade themselves, but figure out how the computers should trade. These nerds mine data to find patterns in market movements, and then design algorithms to take advantage of similar situations as they come up in real time.

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