DOCSLIB.ORG

Quickstartqit-2-13-16.Pdf

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Quickstartqit-2-13-16.Pdf 3 Reasons Traders Should use Algorithms and a Quick-Step Guide to Getting Started “ Trading floors were once the preserve of adrenalin-fuelled dealers aggressively executing the orders of brokers who relied on research, experience and gut instinct to decide where best to invest.” - Richard Anderson BBC News No longer do trading floors belong to adrenalin-fuelled dealers aggressively executing orders from brokers who relied on research, experience and gut instinct to invest. The game has changed. The Wall Street elite, or in other words, the banks and hedge funds, are now using supercomputers armed with powerful algorithms programmed by PhD brainiacs to trade hundreds of stocks and currencies and in the process make boatloads of money. No longer are powerful algorithms the preserve of the Wall Street Elite. Quant trading has come to main street and “ No longer are the average retail trader can now use that same powerful technology to track patterns or trends in trading behavior algorithms the preserve of the and create algorithms to predict future market movements. Wall Street Elite Although these quantitative trading programs are the basis of all quickfire trades (also known as high-frequency trading [HFT]), in which positions are held for a matter of seconds, these programs are now being used in more traditional trading where the holding period can be days, weeks or months. www.quantitrader.com Page 1 No one has done the research, so we can’t be certain just how successful algorithmic trading is, but as Scott Patterson of The Quants says: “They have been around long enough now to assume they are extremely profitable. The vast majority of firms use quantitative trading, It drives almost everything that goes on on Wall Street.” Their proliferation would certainly suggest so. Two of the biggest HFT firms, Tradebot and Getco, alone account for about 15%-20% of all equity trading in the US. As they are private companies, it is hard to know precisely how far their influence extends but a recent government-backed study in the UK estimated that between a third and a half of all shares trading in Europe, and more than two-thirds in the US, was done by algorithms, or Quant trading. “ The over-all point is that new technology will not necessarily replace old technology, but it will date it. Eventually, it will replace it. It’s like people who had black-and-white TVs when color came out. They eventually decided whether or not the new technology was worth the investment.” Steve Jobs In the stock market, algo-trading (trading with an algorithm) is increasingly taking over the traditional way of trading as complex number-crunching algorithms work out what to buy and what to sell. Some estimates show up to 70% of Wall Street trading is now run by so-called black box or algo-trading. Here are the 3 reasons why YOU should be trading with algorithms There are many reasons why large hedge funds and mutual funds use quantitative trading systems to make trading decisions but the most important reasons for the average retail trader are: www.quantitrader.com Page 2 1. Trading with an algorithm eliminates trading anxiety Emotion has always been, and will always be, the bane of a successful trading career. Even the best traders are plagued by emotions during a crucial trade because traders, before anything else, are still humans. Even if you have the best trading strategy, if emotions intervene at the most crucial point of a trade, all the best-laid plans can go awry. Quantitative trading systems eliminate such risks since it makes trading decisions based on mathematically tested ideal conditions. When you trade with algorithms you will no longer: • Change the rules for short-term satisfaction • Exit early or refuse to take a trade to avoid pain • React to news • Believe “I am a trader therefore I need to trade” • Think “my account is up so I can take on more risk” • Fall into the rabbit hole called “solution mode” where you start looking for another indicator that will finally be “the one” • Start digging into financials for more data on a company or think, “if I just did more research I would be a good trader” • Believe you are not as smart as 99% of those on Wall Street www.quantitrader.com Page 3 2. Algorithms can scan 1000s of symbols for patterns A quantitative trading system can scan 1000s of symbols in minutes looking for patterns or setups. The “ sheer magnitude of this endeavor makes it impossible No human on this planet for a human without a computer. could even attempt a feat The QiT algorithms scan the (over) 30,000 US equity like that. market symbols every night for the candidates that fit Street Elite our rule set. This takes the computer no more than 30 minutes. No human on this planet could even attempt a feat like that. 3. A Quantitative system can be tested and validated When you create a trading system (or algorithm) for your trading rules, the first item on the agenda is backtesting to see if your ideas are indeed profitable. If they have not been profitable over time why would you think they would be profitable in the future? Testing an algorithm over historical data is an essential part of the strategy development process. Estimating the performance of the algorithm allows the trader to refine the strategy and modify parameters before trying it with live data. Backtesting is a complicated task requiring survivorship bias free data and special software to run the algorithms. QiT uses Amibroker to run its algorithms and our data provider is Norgate Premium Data. Algorithms do not merely rely on conventional trading wisdom, they validate – or invalidate - conventional wisdom. What does, "let your profits run and cut your www.quantitrader.com Page 4 losses" really mean? How much profit? At what point do you cut your losses? You cut them too short and you'll never make it as a trader. No bias or subjective analysis is ever introduced in the validity of the system. Therefore, trading confidence rests on quantifiable and tested values. Become the algorithm If you trade with an algorithm you have to give yourself up to it. You have to trade as if you were the algorithm. This doesn’t mean you have to give up any particular indicator you like but if you want to trade with an algorithm and use a particular indicator, you develop your algorithm around it. If you have a particular strategy you always trade and develop your algorithm around it. Then test and test and retest it to see if it was successful during bullish years, bearish years, low volatility, high volatility, and market crashes (like we had in 2008). Test it in every kind of trading environment you can think of and see how well it works. Once you’ve put in the hours and the dollars to develop your algorithm you enter the world of a Quant and you become the algorithm when you trade. All the planning has been done and is behind you, so all you need to do is follow the signals given to you by your planning and the work you’ve put into its development. But you need to trade it as if you were the algorithm, not as if you were a trader. Does the algorithm take heed of the news? Does the algorithm worry about economic events that take place during the day? Does the algorithm watch price action during the day? NO. www.quantitrader.com Page 5 Take off the trader’s hat and put on the Quant hat. The more often you do this the better that hat will fit. The easier it will become to not heed news, not watch your trade intraday and just give yourself to the algorithm. This is the way retail traders make boatloads of money. www.quantitrader.com Page 6 5 Steps to Start Algorithmic Trading Algorithmic trading is typically perceived as a complex area for beginners. It can cover a wide range of markets (options, futures, equities), and certain features require a significant degree of mathematical and statistical maturity. Thus, it can be extremely disconcerting for even the experienced trader. The reality though, once you find an Algo Trading site in which you trust, the overall concepts are straightforward to grasp. You have no need to know how to: • code the software that resides under the algorithm • use a data provider that does not have survivorship bias • produce the nightly signals • optimize the algorithms without over optimizing So if you want to start Algo trading where do you start? 1. The most important piece of the puzzle is knowing what kind of trader you are. In other words what is your style? Here at QiT we trade US equities with EOD data. We use no leverage so we keep our risk to a minimum. If you don’t want to use leverage and trade US Equities, then QiT is a good fit. 2. It is vital you have a broker who: a. is as concerned about commissions as you are. Many are not. One of the QiT portfolios had 40 trades in one month. If your broker charges you $10 per trade, there is no trading system that could make up for an $800.00 drawdown, unless you were trading with very large capital. Many at QiT www.quantitrader.com Page 7 use IB because their commission structure is one of the best in the business. b. will have shares available to borrow when you try to short.
Load more

Recommended publications
  • The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It Pdf, Epub, Ebook
    THE QUANTS: HOW A NEW BREED OF MATH WHIZZES CONQUERED WALL STREET AND NEARLY DESTROYED IT PDF, EPUB, EBOOK Scott Patterson | 337 pages | 02 Feb 2011 | Random House USA Inc | 9780307453389 | English | New York, United States The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It PDF Book Scott Patterson The Quants Similar books. Paulso… More. The only interesting figures in the book, Thorp, Shannon, Mandelbrot, Farmer and Taleb were only given minor attention. Shelve A Man for All Markets. Original Title. Most books which detailed the Great Recession of has basically restated the same thing, in almost the same refrain that its author knew that the world was running blindfolded towards a speeding train. I'm glad I didn't bother reading any of these reviews Patterson appears to lay the primary blame for the panic at the feet of the quants. Everyone, that is, except a few reckless wildcatters - who risked their careers to prove th… More. Yes, default models are based on history, and it is true that modelers now understand that the fourth component can blow out and bonds may trade like stock, regardless of the fair value of the underlying cashflows, making modeled prices at that point irrelevant. Sep 25, Phil Simon rated it really liked it Shelves: business. It's a great backstory that walks you through the original algorithmic traders on wall st and how their quantitative analysis strategies evolved from trying to beat the dealer at blackjack or game the roulette wheel, to running the world's financial markets.
    [Show full text]
  • A Political Economy of Nassim Nicholas Taleb
    The Red Swan Rob Wallace The Red Swan A political economy of Nassim Nicholas Taleb 1 farmingpathogens.wordpress.com An e-single by Rob Wallace farmingpathogens.wordpress.com The Red Swan Rob Wallace ‘Why didn’t you walk around the hole?’ asked the Tin Woodman. ‘I don’t know enough,’ replied the Scarecrow, cheerfully. ‘My head is stuffed with straw, you know, and that is why I am going to Oz to ask him for some brains.’ –L. Frank Baum (1900) She didn’t know what he knew, what she could take for granted: she tried, once, referring to Nabokov’s doomed chess-player Luzhin, who came to feel that in life as in chess there were certain combinations that would inevitably arise to defeat him, as a way of explaining by analogy her own (in fact somewhat different) sense of impending catastrophe (which had to do not with recurring patterns but with the inescapability of the unforeseeable)... –Salman Rushdie (1989) ERHAPS BY CHANCE ALONE Nassim Nicholas Taleb’s best-selling The Black Swan: The Impact of the Highly Improbable , followed now by the just released Antifragile, captures the P zeitgeist of 9/11 and the foreclosure collapse: If something of a paradox, bad things unexpectedly happen routinely. For better and for worse, Black Swan caustically critiques academic economics, which serve, more I must admit in my view than Taleb’s, as capitalist rationalization rather than as a science of discovery. Taleb crushes mainstream quantitative finance, but fails as spectacularly on a number of accounts. To the powerful’s advantage, at one and the same time he mathematicizes Francis Fukuyama’s end of history and claims epistemological impossibilities where others, who have been systemically marginalized, predicted precisely to radio silence.
    [Show full text]
  • High Frequency Trading 101: Regulatory Impact in American and European Markets
    HIGH FREQUENCY TRADING 101: REGULATORY IMPACT IN AMERICAN AND EUROPEAN MARKETS by Yasmine Elisabeth Allen A thesis submitted to the faculty of The University of Mississippi in partial fulfillment of the requirements of the Sally McDonnell Barksdale Honors College. Oxford, MS May 2016 Approved by ___________________________________ Advisor: Doctor Bonnie Van Ness ___________________________________ Reader: Doctor Robert Van Ness ___________________________________ Reader: Doctor Alice Cooper © 2016 Yasmine Elisabeth Allen ALL RIGHTS RESERVED ii ACKNOWLEDGMENTS I would first like to acknowledge my thesis advisor Dr. Bonnie Van Ness through her countless of hours and guidance helping me I managed to finish writing this thesis. I would also like to thank Brock Howell for his constant encouragement that I could finish this thesis even when I wanted to quit. As well as reading over it over and over again to make sure that he understood what I was trying to convey. iii Abstract YASMINE ELISABETH ALLEN: HIGH FREQUENCY TRADING 101: REGULATORY IMPACT IN AMERICAN AND EUROPEAN FINANCIAL MARKETS (under the direction of Bonnie Van Ness) High frequency trading has impacted the American and European financial markets through its advanced algorithms, rapid speed, and preferential treatment from purchasing information and co-location from exchanges. High frequency trading alone is not harmful, but without proper regulations it can hurt the financial markets. In this thesis, I researched implemented regulations, the consequences of those regulations, and pending new regulations. To gather information, I studied relevant research on the topic, including numerous academic articles and books to get a broader view of the issues. Through my research, I have found that previous regulations implemented by American and European regulatory agencies have benefitted high frequency trading firms, and that exchanges, through selling information via co-location, have created an environment that benefits high frequency traders.
    [Show full text]
  • Do High Frequency Traders Need to Be Regulated? Evidence from Algorithmic Trading on Macroeconomic News
    Do High Frequency Traders Need to be Regulated? Evidence from Algorithmic Trading on Macroeconomic News Tarun Chordia, T. Clifton Green, and Badrinath Kottimukkalur* December 2015 Abstract Stock index exchange traded funds and futures prices respond to macroeconomic announcement surprises within a tenth of a second, with trading intensity increasing ten-fold in the quarter second following the news release. Profits from trading quickly on announcement surprises are relatively small and decline in recent years. Trading profits also decrease with relative quote intensity. The speed of information incorporation increases in recent years and order flow becomes less informative, consistent with prices responding to news directly rather than indirectly through trading. Our evidence is consistent with increasing competition amongst high frequency traders, which mitigates concerns about their speed advantage. JEL Classification: G14; G12; Contacts Chordia Green Kottimukkalur Voice: 1-404-727-1620 1-404-727-5167 Fax: 1-404-727-5238 1-404-727-5238 1-404-727-5238 E-mail: [email protected] [email protected] [email protected] Address Goizueta Business School Goizueta Business School Goizueta Business School : Emory University Emory University Emory University Atlanta, GA 30322 Atlanta, GA 30322 Atlanta, GA 30322 *We thank Nandini Gupta, Craig Holden, Jonghyuk Kim and seminar participants at Indiana University, Tulane and the SEC for helpful comments. 1. Introduction Financial information is increasingly being released to, interpreted by, and traded on by computers. Dramatic improvements in technology have allowed computer algorithms to dynamically monitor multiple trading venues and strategically execute orders. These algorithms emphasize speed, and as a result trade latency has been reduced to milliseconds.
    [Show full text]
  • The Quants: How a New Breed of Math Whizzes Conquered Wall
    Acad. Quest. (2010) 23:506–514 DOI 10.1007/s12129-010-9189-4 REVIEW ESSAY The Quants: How a New Milken, Warren Buffett.1 In the Breed of Math Whizzes “quant” revolution on Wall Street Conquered Wall Street and that took place over the past twenty Nearly Destroyed It, by Scott years, in which mathematical and Patterson. New York: Crown scientific experts created new high-tech Publishing, 2010, 352 pp., investment strategies, we put the $27.00 hardbound. two together. Everyone from Barney Frank to Ben Bernanke to Fannie My Life as a Quant: Mae to the heads of the Harvard and Reflections on Physics and Yale endowment funds to the chief Finance, by Emanuel Derman. executives of the world’slargest Hoboken, NJ: John Wiley & banks and investment banking Sons, 2007, 292, pp., $16.95 houses—even average investors in paperback. many cases—fell under the spell of the quants. The Crash of the Quants It turns out that Roger Lowenstein’s very fine When Genius Failed was Wight Martindale, Jr. wildly mistaken2—so-called “genius” Published online: 27 October 2010 did not fail, it returned with a # Springer Science+Business Media, LLC 2010 vengeance to create even greater havoc. These two books, The Quants: Americans have long been mesmerized How a New Breed of Math Whizzes by scientific genius. Think Thomas Conquered Wall Street and Nearly Edison and Albert Einstein. We are Destroyed It, by Scott Patterson, and equally fascinated by financial My Life as a Quant: Reflections on wizards: J. P. Morgan, Michael Physics and Finance, by Emanuel Derman, provide contrasting insights Wight Martindale, Jr., is an adjunct professor in both the business school and the college of arts and sciences at Lehigh University, Bethlehem, PA 18015; 1 ’ [email protected].
    [Show full text]
  • September 28, 2012 Elizabeth M. Murphy Secretary U.S. Securities
    September 28, 2012 Elizabeth M. Murphy Secretary U.S. Securities and Exchange Commission 100 F St., N.E. Washington, DC 20549-1090 RE: File No. 4-652; Market Technology Roundtable Dear Ms. Murphy, Thank you for the opportunity to submit comments on behalf of Public Citizen, a national nonprofit organization with over 300,000 members and supporters. Computer-driven trading has profound effects on investors and on market stability, and we urge the Commission to carefully consider all available options during its Market Technology Roundtable, including imposing financial speculation taxes on high-frequency trading. INTRO Our financial markets are not serving their intended purpose. Markets are supposed to function as intermediaries, connecting investors who provide capital with producers who are able to put that capital to work most efficiently. Such a model serves our long-term economic interests, spurring new innovations and job creation. Yet under our current framework, short-term, often predatory, speculation increasingly drives our financial activities, while long-term, productive investment takes a back seat. Computer-driven high-frequency trading is exacerbating this misallocation of resources. A few market participants have been able to obtain special access and, in turn, reap favored treatment at traditional investors’ expense. Additionally, high-frequency trading imperils the financial system. The prevalence of high-frequency trading is a relatively new phenomenon, having taken off in the last five years or so. But in its short lifespan, we've already seen the potentially disastrous consequences that can occur because of it. The May 6, 2010, flash crash—in which almost 1,000 points were erased from the Dow Jones Industrial Average and one trillion dollars in wealth momentarily vanished—is the most alarming example.
    [Show full text]
  • Dark Pool Regulation: Fostering Innovation and Competition While Protecting Investors Nicholas Crudele
    Brooklyn Journal of Corporate, Financial & Commercial Law Volume 9 | Issue 2 Article 4 2015 Dark Pool Regulation: Fostering Innovation and Competition While Protecting Investors Nicholas Crudele Follow this and additional works at: https://brooklynworks.brooklaw.edu/bjcfcl Recommended Citation Nicholas Crudele, Dark Pool Regulation: Fostering Innovation and Competition While Protecting Investors, 9 Brook. J. Corp. Fin. & Com. L. (2015). Available at: https://brooklynworks.brooklaw.edu/bjcfcl/vol9/iss2/4 This Note is brought to you for free and open access by the Law Journals at BrooklynWorks. It has been accepted for inclusion in Brooklyn Journal of Corporate, Financial & Commercial Law by an authorized editor of BrooklynWorks. DARK POOL REGULATION: FOSTERING INNOVATION AND COMPETITION WHILE PROTECTING INVESTORS INTRODUCTION A fight has broken out between long-time Wall Street associates, the stock exchanges, and the broker-dealers; regulators around the globe are taking sides.1 The fight is over dark pools, the off-exchange marketplaces where broker-dealers execute trades without displaying the price quotes to the public.2 As these pools gain more and more of the daily trading volume,3 regulators are weighing the benefits of increased competition against the potential risks.4 Spawned from the stock market deregulation brought on by the Securities Act Amendments of 1975 (1975 Amendments),5 dark pools were originally developed to allow institutional investors6 to execute large orders without causing the markets to move.7 As trading became increasingly electronic with the advent of the internet (and moved away from the traditional exchanges), dark pools became increasingly popular as a way to hide institutional orders from the predatory activities of high-frequency traders (HFT).8 Today however, there are growing concerns that this increased activity in the dark is hurting the markets and investors.9 1.
    [Show full text]
  • Craig L Schwab, Et Al. V. E*TRADE Financial Corporation, Et Al. 16-CV
    Case 1:16-cv-05891-JGK Document 72 Filed 08/09/17 Page 1 of 68 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK ) CRAIG L. SCHWAB, Individually and on ) Behalf of All Others Similarly Situated, Case No. 16-cv-5891-JGK ) ) Plaintiff, CLASS ACTION ) vs. ) THIRD AMENDED COMPLAINT FOR ) E*TRADE FINANCIAL CORPORATION, VIOLATIONS OF FEDERAL SECURITIES ) E*TRADE SECURITIES LLC, PAUL T. LAWS ) IDZIK and KARL A. ROESSNER, ) JURY TRIAL DEMANDED ) Defendants. ) Lead Plaintiff Craig L. Schwab (“Plaintiff”), by his attorneys, except for his own acts, which are alleged on knowledge, alleges the following based upon the investigation of his counsel, which included a review of, among other things, United States Securities and Exchange Commission (“SEC”) filings by E*TRADE Financial Corporation (“E*TRADE Financial”) and E*TRADE Securities LLC (“E*TRADE”), as well as regulatory filings and reports, press releases and other public statements issued by E*TRADE Financial, and various agreements between E*TRADE and its clients: NATURE OF THE ACTION 1. This is a securities class action on behalf of all clients of E*TRADE between July 12, 2011 and July 22, 2016 (the “Class Period”) who placed trade orders that E*TRADE routed in a self-interested manner at the expense of its customers’ best interests and inconsistent with the duty of best execution while failing to tell its customers that it was giving priority to its receipt of order routing payments and other reciprocal business arrangements. Plaintiff brings his claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C.
    [Show full text]
  • High‐Frequency Trading and the New Stock Market: Sense and Nonsense Merritt .B Fox Columbia University Law School, [email protected]
    University of Michigan Law School University of Michigan Law School Scholarship Repository Articles Faculty Scholarship 2018 High‐Frequency Trading and the New Stock Market: Sense And Nonsense Merritt .B Fox Columbia University Law School, [email protected] Lawrence R. Glosten Columbia University Business School, [email protected] Gabriel V. Rauterberg University of Michigan Law School, [email protected] Available at: https://repository.law.umich.edu/articles/2008 Follow this and additional works at: https://repository.law.umich.edu/articles Part of the Administrative Law Commons, and the Securities Law Commons Recommended Citation Rauterberg, Gabriel. "High-Frequency Trading and the New Stock Market: Sense And Nonsense." Merritt .B Fox and Lawrence R. Glosten, co-authors. J. Applied Corp. Fin. 29, no. 4 (2017): 30-44. This Article is brought to you for free and open access by the Faculty Scholarship at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in Articles by an authorized administrator of University of Michigan Law School Scholarship Repository. For more information, please contact [email protected]. High-Frequency Trading and the New Stock Market: Sense And Nonsense by Merritt B. Fox, Columbia Law School, Lawrence R. Glosten, Columbia Business School, and Gabriel V. Rauterberg, Michigan Law School* tock trading in the U.S. has been totally trans- Regulators reacted rapidly to the furor over the new formed over the last twenty-five years. The stock market ignited by Lewis’ book. Soon after, the U.S. S NASDAQ dealers and NYSE specialists are gone; Department of Justice, the FBI, the Securities and Exchange the same stock can now be traded on up to 60 Commission (“SEC”), and the Commodity Futures Trading competing venues where computers match incoming orders.
    [Show full text]
  • Dark Pools in Equity Trading: Policy Concerns and Recent Developments
    Dark Pools in Equity Trading: Policy Concerns and Recent Developments Gary Shorter Specialist in Financial Economics Rena S. Miller Specialist in Financial Economics September 26, 2014 Congressional Research Service 7-5700 www.crs.gov R43739 Dark Pools in Equity Trading: Policy Concerns and Recent Developments Summary The term “dark pools” generally refers to electronic stock trading platforms in which pre-trade bids and offers are not published and price information about the trade is only made public after the trade has been executed. This differs from trading in so-called “lit” venues, such as traditional stock exchanges, which provide pre-trade bids and offers publicly into the consolidated quote stream widely used to price stocks. Dark pools arose partly due to demand from institutional investors seeking to buy or sell big blocks of shares without sparking large price movements. The volume of trading on dark pools has climbed significantly in recent years, from about 4% of overall trading volume in 2008 to about 15% in 2013. While dark pools reportedly have lower trading fees, their lack of price transparency has sparked concerns about the continued accuracy of consolidated stock price information. In addition, fairness concerns have surfaced in recent regulatory and enforcement actions, in the press, and in Michael Lewis’s book Flash Boys over allegations that dark pool operators may have facilitated front-running of large institutional investors by high-frequency traders, in exchange for payment, and misrepresented the nature of high-frequency trading in the dark pools. This report examines the confluence of factors that led to the rise of dark pools; the potential benefits and costs of such trading; some regulatory and congressional concerns over dark pools; recent regulatory developments by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), which oversees broker-dealers; and some recent lawsuits and enforcement actions garnering significant media attention.
    [Show full text]
  • How the New York Attorney General Is Shedding Light on Dark Pools and High Frequency Trading
    Are You Afraid of the Dark?: How the New York Attorney General Is Shedding Light on Dark Pools and High Frequency Trading “And then there is maybe the greatest cost of all: Once very smart people are paid huge sums of money to exploit the flaws in the financial system, they have the spectacularly destructive incentive to screw the system up further, or to 1 remain silent as they watch it being screwed up by others.” I. INTRODUCTION Similar to nearly every industry in the world, technology forever changed Wall Street.2 Electronic trading effectively started to replace human buyers and sellers in the early 1990s, but few could anticipate the speeds at which high-frequency trades occur today.3 Savvy quants—mathematicians who use quantitative techniques to make market predictions—began to dominate the finance world in the early 2000s through the use and development of complex trading strategies and algorithms.4 These changes altered the trading landscape as more venues, known as pools, became available to participants in the U.S. equity market, such as the dark pool alternative trading system (ATS).5 Dark pools became attractive to investors because, unlike trading in “lit” 1. MICHAEL LEWIS, FLASH BOYS: A WALL STREET REVOLT 266 (W.W. Norton & Co., Inc. ed., 1st ed. 2014). 2. See id. at 3-4 (highlighting gradual shift toward computerized trading after 1987 stock market crash). The human traders on the floor of the New York Stock Exchange are merely anachronisms used for television clips; “[t]he U.S. stock market now trades inside black boxes, in heavily guarded buildings in New Jersey and Chicago.” Id.
    [Show full text]
  • “Secrets Self-Made Millionaires Teach Their Kids” by Steve Siebold “How to Create and Manage a Hedge Fund” by Stuart
    “Secrets Self-Made Millionaires Teach Their Kids” by Steve Siebold “How to Create and Manage a Hedge Fund” by Stuart A McCrary “The Last Tycoons: The Secret History of Lazard” by William D Cohan “Fundamentals of Income Taxation” by Christopher P Woehrle “Series 3: National Commodities Futures Examination Prep” by Kaplan Financial “Market Wizards” by Jack Schwager “The Power of Zero” by David McKnight “Option Trader’s Hedge Fund” by Dennis A Chen “Principles: Life and Work” by Ray Dalio “Reminiscences of a Stock Operator” by Edwin Lefevre “The Secret Club That Runs The World” by Kate Kelly “When the Wolves Bite” by Scott Wapner “Confidence Game: How a Hedge Fund Manager Called Wall Street’s Bluff” by Christine S Richard “Leg the Spread” by Cari Lynn “The Buy Side: A Wall Street Trader’s Tale of Spectacular Excess” by Turney Duff “Born to Steal: When the Mafia Hit Wall Street” by Gary Weiss “Den of Thieves” by James B Stewart “No One Would Listen: A True Financial Thriller” by Harry Markopolos “Molly’s Game” by Molly Bloom “Conspiracy of Fools: A True Story” by Kurt Eichenwald “A Man for All Markets” by Nassim Nicholas Taleb “The Alpha Masters” by Maneet Ahuja “Dark Pools” by Scott Patterson “The Physics of Wall Street” by James Owen Weatherall “More Money Than God” by Sebastian Mallaby “Currency Wars: The Making of the Next Global Crisis” by James Rickards “King of Capital” by David Carey and John E Morris “Charlie Munger: The Complete Investor” by Tren Griffin “Fooling Some of the People All of the Time” by David Einhorn “The Greatest Trade Ever” by Gregory Zuckerman “Inside the House of Money” by Steven Drobny and Niall Ferguson “Young Money: Inside the Hidden World of Wall Street’s Post-Crash Recruits” by Kevin Rose “Flash Boys” by Michael Lewis “The Quants” by Scott Patterson “One Good Trade” by Mike Bellafiore “When Genius Failed: The Rise and Fall of Long-Term Capital Management” by Roger Lowenstein “Think and Grow Rich” by Napoleon Hill .
    [Show full text]