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Wall Street slowly goes bionic:

Louis Morgan, managing director of hedge-fund firm HG Trading, has never talked to his best trader. That's because his best trader is a machine.

Morgan's top earner is a computer whose software can monitor thousands of stocks simultaneously, and respond in less than a blink of an eye when opportunities arise.

"Doing what we do by hand would be impossible," said Morgan, who focuses on statistical arbitrage -- taking advantage of sudden and potentially profitable price anomalies between securities that usually trade in correlation.

Morgan uses a computer trading system based on algorithms, complex mathematical formulas that quickly weigh a huge number of possible trades and execute orders in milliseconds (a millisecond is one thousandth of a second).

Best of all, you don't have to pay an algorithm a bonus.

If all goes well, I think Wall Street can entirely displace humans by 2011. Of course, stock blogging can never be replicated by a machine. (They wouldn't dare.)

Posted by edelfenbein at June 1, 2007 10:14 AM