“By the time the ordinary investor sees a quote, it’s like looking at a star that burned out 50,000 years ago”
Presentation on algorithmic trading using R:
One of my favorite books is Statistical Computing with R by Maria L. Rizzo where she describes computational statsics as an area within statistics that uses computational, graphical and numerical approches to solve statistical problems. Computational statistics encompasses exploritory data analysis, Monte Carlo methods, and data partitioning.
In her book she says “The inceasing interest in massive and streaming data sets, and high dimensional data arising in applications of biology and engineering, for example, demand improved and new computational approaches for multivariate analysis and visualization.”
In my current company, my possition gives me the opportunity to analize a constant stream of manufacturing observations as they relate to several thousand engineering variables. This exciting opportunity will allow me to implement many of the same multivariate methods and design of experiments that can be applied to finance and quantitative trading.
There is no dobut about it that the stock market is changing with advances in algorithmic trading. Last year’s 60 minutes article on cbs is a great introduction to how high speed traders are changing wall street.
Personally, I dont even look at it as a bet on the quality of the company or the fundamentals of that industry. Instead, to me it is a bet on the percieved quality and traders’ reactions to market moving news.
Since I don’t work in the finance industry I don’t have a lot of conversations with coworkers about topics like this. However, today the topic of high speed trading came up in lunch and it was interesting for me to listen to average people discuss opinions about things like technical vs. fundamental stock valuation, unfare advantages that “everyone else” gets because they may have a faster computer, access to markets not constrained to the 9:30am to 4:00pm ET New York Stock Exchange, and other insider edges. My opinion: It is all out there for the taking just capitalize on the advantages that you have and make it happen.