Flash Ecology
Himanshu Damle (@) shared the link to this paper, which definitely needs to be passed along here. Called ‘Abrupt rise of new machine ecology beyond human response time’ it is co-authored by Neil Johnson, Guannan Zhao, Eric Hunsader, Hong Qi, Nicholas Johnson, Jing Meng & Brian Tivnan. Abstract:
Society’s techno-social systems are becoming ever faster and more computer-orientated. However, far from simply generating faster versions of existing behaviour, we show that this speed-up can generate a new behavioural regime as humans lose the ability to intervene in real time. Analyzing millisecond-scale data for the world’s largest and most powerful techno-social system, the global financial market, we uncover an abrupt transition to a new all-machine phase characterized by large numbers of subsecond extreme events. The proliferation of these subsecond events shows an intriguing correlation with the onset of the system-wide financial collapse in 2008. Our findings are consistent with an emerging ecology of competitive machines featuring ‘crowds’ of predatory algorithms, and highlight the need for a new scientific theory of subsecond financial phenomena.
The techno-financial ecology is not evolving as fast as it is running, and scientific research has computers too, so pursuing a cognitive arms-race against this thing is not necessarily as futile as it might at first sound … but still. Operations in the “all-machine phase” is the strategic environment under emergence.
You must have heard of Nanex.
The perfect Pilferage.
http://www.nanex.net/aqck2/4661.html
Rise of the HFT machines. Note its not HFT its High Frequency Quoting.
http://www.nanex.net/aqck/2804.html
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Posted on October 25th, 2014 at 8:09 pm | Quote[…] Source: Outside In […]
Posted on October 25th, 2014 at 8:42 pm | Quoteyes. HFT. they place themselves as close to the data points physicaly so they can scalp. each fraction of a second becomes valuable.Plus, they all roam around trying to do things such as momentum ignition to fool other algorithms into jumping in, and then drop out (with profit). They also seem to be engaged in actions like quote stuffing to slow other hfts and institutions down (they have to process all the quote requests). I’m sure there are plenty of papers on this knocking around.
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Posted on October 26th, 2014 at 12:57 am | QuoteHere is a decent summary of HFT – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/289021/11-1241-dr10-high-frequency-trading-information-and-profits.pdf
And here is a whole bunch of papers – http://papers.ssrn.com/sol3/results.cfm?RequestTimeout=50000000
The finance market is likely (in my view) going to be the main driver behind any AI. The algorithms are competing, and it is only a matter of time before it becomes more sophisticated. I mean, it dosen’t take a genius to see the value in having an a AI which can instantaneously calculate yields and arbitrage opportunities between markets. The key to the financial markets is information. How quick you get it, how quick you react and how accurate you are.
Also, anyone notice the JP Morgan hacking? that’s going to be a major driver as well.
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October 30th, 2014 at 8:07 pm
http://journal.frontiersin.org/Journal/10.3389/fnsys.2011.00075/full
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October 30th, 2014 at 11:26 pm
Laterally related.
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All we need is someone with the money and the balls to be Damien Knight
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Posted on October 27th, 2014 at 12:27 pm | Quote