Check out the name of one of Citi's strongest algorithms, just released in The Atlantic:
The Atlantic article makes Dagger sound like a frightening Dragon beast.
“It’s self-learning,” says Young Kang, the guy who "takes care" of Dagger every day. “The numbers keep updating, the strategy keeps adjusting itself. It gets smarter.”
There's even a photo of a Dragon leading the story, Monsters in the Market. And a description of different kinds of algorithms that likens them to different species:
Some species can detect other algos embarking on predictable trading strategies, and ruthlessly adjust their techniques.
But maybe outside of populist culture, which is rampant with anti-Wall Street sentiment, Citi's "Dagger" is actually more like a prized pet than a scary monster.
Bred and trained in secret by Citi’s financial engineers, Dagger can stalk through more than 20 markets, public and otherwise—hunting for anomalies, buying and selling, prowling through mountains of historical data—all at the behest of Citi’s clients.
Without the creepy "stalking" and "hunting" language, it sounds more like superior breeding naturally selected Dagger to lead Wall Street into a new era where, just like in every other business sector, computers are changing everything or "taking over." That's our take, at least.
Let's remember that, like Irene Aldridge pointed out on CNBC a couple of weeks ago, in 1892, thousands petitioned to ban trading in futures when it was first introduced.
The Atlantic article is a great example of how technology-driven trading is finally hitting the mainstream consciousness. Articles about algorithms and high frequency trading and "quants" have until recently been trapped inside just trading journalism.
But - articles about HFT and algos couldn't be hitting mainstream news at a worse time. People are in the mood for government action like no time in recent memory.
Even if everyone, even algo, quant, and high frequency traders themselves, are in favor of tighter regulation, if it's taken too far it could cost them their jobs and slow a natural progess towards the use of better trading technology.
Check out the wild regulations being proposed via Senator Kaufman's war on high frequency trading -->
Read more: http://www.businessinsider.com/meet-dagger-citis-massive-self-learning-algorithm-that-scans-2010-6#ixzz1JWzHkkzu