Quant Trading or How Mathematicians Run the World

Investment decisions are no longer being made by financiers, but increasingly by Ph.D. mathematicians and the immensely complex computer programs they devise.

What's the Latest Development?


Once the purview of obsessive traders, financial markets the world over are increasingly controlled by algorithmic trading formulas that buy and sell large volumes of stock automatically. Developed by some of the world's leading theoretical mathematicians, these formulas operate using triggers which allow large quantities of shares to be held for just a few seconds before being sold again. At least 15 percent of all equity trades in the U.S. are executed using these quantitative trading programs. 

What's the Big Idea?

The elimination of the human element from stock trading is both welcome, given the greed and insider trading of late, and frightening, as exhibited by the Dow Jones' flash-crash of May 2010 when computers automatically sold off $700 billion. Scott Patterson, a Wall Street Journal reporter, says that quantitative trading programs increase market volatility: "I've seen too many instances during the recent sell-off where a sudden spurt of frequent trades has sent share prices bouncing down." He says automatic trading already motivates almost everything on Wall Street. 

LinkedIn meets Tinder in this mindful networking app

Swipe right to make the connections that could change your career.

Getty Images
Sponsored
Swipe right. Match. Meet over coffee or set up a call.

No, we aren't talking about Tinder. Introducing Shapr, a free app that helps people with synergistic professional goals and skill sets easily meet and collaborate.

Keep reading Show less

Want to age gracefully? A new study says live meaningfully

Thinking your life is worthwhile is correlated with a variety of positive outcomes.

YOSHIKAZU TSUNO/AFP/Getty Images
Surprising Science
  • A new study finds that adults who feel their lives are meaningful have better health and life outcomes.
  • Adults who felt their lives were worthwhile tended to be more social and had healthier habits.
  • The findings could be used to help improve the health of older adults.
Keep reading Show less
Promotional photo of Lena Headey as Cersei Lannister on Game of Thrones
Surprising Science
  • It's commonly thought that the suppression of female sexuality is perpetuated by either men or women.
  • In a new study, researchers used economics games to observe how both genders treat sexually-available women.
  • The results suggests that both sexes punish female promiscuity, though for different reasons and different levels of intensity.
Keep reading Show less

This 1997 Jeff Bezos interview proves he saw the future coming

Jeff Bezos, the founder of Amazon.com, explains his plan for success.

Technology & Innovation
  • Jeff Bezos had a clear vision for Amazon.com from the start.
  • He was inspired by a statistic he learned while working at a hedge fund: In the '90s, web usage was growing at 2,300% a year.
  • Bezos explains why books, in particular, make for a perfect item to sell on the internet.
Keep reading Show less