RT Journal Article
SR Electronic
T1 Be Wary of Black-Box Trading Algorithms
JF The Journal of Investing
FD Institutional Investor Journals
SP 7
OP 15
DO 10.3905/joi.2019.1.090
VO 28
IS 5
A1 Smith, Gary
YR 2019
UL http://joi.pm-research.com/content/28/5/7.abstract
AB Black-box algorithms now account for nearly a third of all US stock trades. It is a mistake to think that these algorithms possess superhuman intelligence. In reality, computers do not have the common sense and wisdom that humans have accumulated by living. Trading algorithms are particularly dangerous because they are so efficient at discovering statistical patterns—but so utterly useless in judging whether the discovered patterns are meaningful.TOPICS: Quantitative methods, risk management