Algorithmic – or “algo” trading – takes on many permutations. One of which is reading “prose” off news headlines – or scraping wire feeds. Certain words generate buy or sell orders. This can get incredibly sophisticated; speed matters. This is a subset of “HFT”,or high-frequency trading:
Early this morning i glanced at Twitter, after noticing bitcoin and alt-coins were modestly lower. And then a few words from a Tweet caught my eye: “FBI”, “$3 billion ICO”, “fraud”, “LAX”, “arrest”. It’s incredible a project could raise that kind of money and for me not to even have ever heard of it, but this is the case.
You never really know why market me do what they do, but negative headlines like the one I saw do have a way of being instantly priced in – and robotic trading has plenty to do with this.
While I have you, I might take this moment to say that algos or HFT are neither good nor bad in and of themself. I see a Luddite movement of traders who wish markets went back to pits, open outcry. Horse and buggy. Come on: society has moved on; this is the new status quo. Status quo ante ain’t ever coming back. Deal with it. The genie is out of the bottle.
Just touched down in Vancouver. I feel like I’m about to get a three-day MBA in btc mining. Will I get a certificate? Those are nice.