ALGO trading …

“A Prime Inconsistency”.

That is the name of a piece I wrote some years ago of my recollections of the market crash of 1987.  Today with what can only be called an intra-day market crash, the problems of algorithmic trading are once again being re-visited.  How can this well known problem still be so alive and well?

The trading profession lives on volatility.  With out volatility there are few trading opportunities.  Market making activities generate volatility.  Life on Wall Street would be more boring than main street if market volatility were removed.  Algorithmic trading schemes generate as well as take advantage of volatility.

Volatility generates opportunities for both profit and loss.

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