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Robots Take Over – “ultrafast machine ecology” of interacting robots in the global financial market.

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Robots Take Over (from http://is.gd/1TLUbK)
University of Miami (09/11/13) Annette Gallagher

University of Miami researchers recently conducted a study documenting the appearance of an “ultrafast machine ecology” of interacting robots in the global financial market. The findings suggest that for time scales of less than one second, the financial world makes a sudden transition into a cyberenvironment inhabited by packs of aggressive trading algorithms. “Our findings show that, in this new world of ultrafast robot algorithms, the behavior of the market undergoes a fundamental and abrupt transition to another world where conventional market theories no longer apply,” says Miami professor Neil Johnson. The industry’s push for faster systems that can outpace competitors has led to the development of algorithms that can operate faster than the response time for humans. The researchers assembled and analyzed a high-throughput millisecond-resolution price stream of multiple stocks and exchanges. From January 2006 through February 2011, the researchers found 18,520 extreme events lasting less than 1.5 seconds, including both spikes and crashes. They developed a model to understand the behavior and concluded that the events were the result of ultrafast computer trading and not attributable to other factors, such as regulations or mistaken trades. “What we see with the new ultrafast computer algorithms is predatory trading,” Johnson says. “In this case, the predator acts before the prey even knows it’s there.”

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Written by youryblog

September 19, 2013 at 12:09 AM

Posted in Business, Interesting, IT

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