yups,
I don't think a person could compete with a computer in the area of speed, discipline, and no emotion! I would think someone somewhere is probably already doing this.
You ain't kidding....
wired.com
Bill Lupien is at it again. The former CEO of
Instinet and champion of the world's first
automated trading system will launch his latest
innovation, OptiMark, on the Pacific Exchange
(PCX) this summer, with the Chicago Board
Options Exchange and Nasdaq likely to follow.
A few industry analysts already claim the
state-of-the-art electronic trading system is
"the biggest threat the NYSE [New York Stock
Exchange] has ever faced."
Lupien has contended with similar fears
before. In 1969, he helped wire the PCX and
watched bemusedly as an old-timer wielding a
pair of oversize cutting shears clipped the
wires to his trading booth and declared,
amidst applause, "No computer is going to
commit my principal capital." Likewise, when
Lupien urged Instinet to move into Nasdaq in
1983, his senior staff resisted. Lupien pulled
rank and, he says, "The rest is history."
Fifteen years later, however, institutional
investors routinely withhold capital from the
market because leaks about their intentions,
especially for large trades, adversely impact
prices and trading costs. To draw this capital
into the market, Lupien and his partner, Terry
Rickard, developed a system that affords
complete anonymity, nondisclosure, and the
ability to express "degrees of willingness" to
trade over a range of prices and volume.
Using a supercomputer and fuzzy-logic
algorithms, OptiMark conducts an exhaustive
search of all possible trades in its network,
completing up to several billion calculations
per stock in one or two seconds. And rather
than simply match buyers and sellers,
OptiMark discovers the "sweet spot," or best
possible price.
With solid financial backing and more than
175 institutional investors and brokerage firms
signed on to use the system, Colorado-based
OptiMark Technologies is off to a great start,
but still faces resistance. Some traders argue
that OptiMark will unfairly reduce their profit
share and create a "hidden market." Lupien
disagrees, saying all market players --
including the NYSE -- can benefit.
Meanwhile, as the exchanges adapt, Lupien's
pressing forward. His spin-off High
Performance Markets will license the OptiMark
patent to spot, options, or futures markets in
other industries. "It could be insurance,
energy, travel, diamonds, entertainment, or
bandwidth," he suggests. "Wherever you have
supply and demand, OptiMark will transform
the way transactions are created."
This article originally appeared in the June
issue of Wired magazine.
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