09 Apr Your Best Friend!
Has anyone heard of the term Black Box Trading, or Robo Trading, or what the industry calls Algorithmic Trading? If you haven’t, sit back as you’re going to be amazed at what I have to tell you. When you think about the stock market, you probably have a picture of the movie, Wall Street in your mind. You see images of people inside the New York Stock Exchange, traders dressed in suits on the trading floor or money managers in the office buildings with their team of analysts and traders. Right? You think that these people are the big shots or as I call them, the Big Boys that move the markets. Well, you’re wrong.
Over the past decade as the stock exchanges around the world have moved to electronic trading where anyone with access to a computer and internet, can trade anywhere in the world. Algorithmic trading has taken over the global stock markets and by some estimates; computer aided trading now accounts for 70 percent of the total trade volume. In plain language, this means that programmers who are writing code based on algorithms are controlling the movements of the markets. Yeah, you remember those guys with the pocket protector and the nerdy glasses? These guys are the Big Shots on Wall Street and they’re making millions. So next time, you run into a guy or girl at the bar in the Financial District and he/she tells you they are an algorithmic programmer for a Wall Street firm, be nice to them!