Max Dama alerted me to a very good talk by David Leinweber who has been involved with automated trading and the markets for a long time. It’s about an hour long and the first 40 minutes or so are excellent.
In one of his slides he shows this image which I believe sums up the evolution of the trading industry as much as anything.
What I didn’t like about the talk was towards the end of his presentation. David culminates his talk with a discussion of an obviously well chosen example of how you could scour news stories to piece together a case for buying a stock before the market realized the implications of the news and therefore you’d be ahead of a huge surge in the stock.
I think most folks (especially analytical people) would be better off trading technicals than trying to guess how the market will react to a news story. That said, it’s well worth an hour of your time to watch his presentation.
David blogs about his new book, Nerds on Wall Street: Math, Machines and Wired Markets.