Future Trading Desk: What Tools are Needed?

[Andy Nguyen]

Major changes are ahead for the trading desk of the future, according to buy side traders attending the AT Summit in Naples, Florida, earlier this week.
While today’s traders stare at stacks of screens with quotes, news and charts, that environment is on it’s way out, predicted the head of an automated trading firm. Over the next three-to-five years, the trading room will resemble more of a library atmosphere or a PhD. laboratory, where people are working on long-term projects and not basing their trades on the last tick, the firm’s CEO suggested. Instead of watching CNBC, traders will be looking at a billion ticks of data, the CEO said.

Another difference will be that traders will come from multi-disciplinary backgrounds, such as mathematics, science and finance. They will speak more in terms of model confidence, and the statistical probability that the model is correct.

http://www.financetech.com/story/GLOBAL/btg/ftn/null/showArticle.jhtml?articleID=227900485&pgno=1

 

[DominiConnor]

I can see that as true of algo traders, and that the environment for many will move from being like a fighter pilot, to that of a commander who issues orders based upon radar and satellites integrated with comms.

But I don't see TV leaving the trading floor any time soon, indeed modern military command centres subscribe to TV channels as well.

Visualisation in finance is in it's infancy, and I agree that ticks and the calculations based upon them will be better presented than at present, partly because today it couldn't be presented worse if you tried.

But, you need 'news' in the sense that you want intelligent people watching out for things that was not expected by the people who set up the tick/calc visualisations. That probably isn't CNBC or Bloomberg, as currently set up, because they have found themselves aping non-business channels by increasing the "celebrity" of their presenters, and Bloomberg seems to have ever more sport, and since the sport bit is run out of NY it is sport that 80% of the world has not interest in like baseball.

Reuters has the right idea, in making news more 'themed' but have no idea how to manage that sort of business, odd for a news organisation that older than almost any bank.

At my graduation ceremony, many years ago I discovered that one of my peers had a job reading newspapers all day to see if there was anything interesting in them. I see that coming back, and maybe we well see "Merrill Lynch TV" one day. A bunch of people who repackage TV and other news, predigesting it for traders, money managers, quants etc.

Technically that's actually pretty easy, you can by the h/w and s/w off the shelf since news operations use it themselves, and it's not even very expensive. Building it would take 6 months, but the arguments over licensing the content is easily 5 years, maybe more.

But the idea that trading will be based only on long term trends not the most recent tick strikes me as wishful thinking. Fact is that if you aren't up with the latest state, then someone will arbitrage you so hard your nose will bleed.

 

[Joy Pathak]

AQR is known for running it's shop like a graduate school from what I have heard.

 

[Yike Lu]

But the idea that trading will be based only on long term trends not the most recent tick strikes me as wishful thinking. Fact is that if you aren't up with the latest state, then someone will arbitrage you so hard your nose will bleed.

Agree, HFT is here to stay.

 

[const451]

If a plane falls are they going to handle that.

 

[HyperVolatility]

I sincerely think that the majority of trading desks will look like a huge "simulation lab" and FORTUNATELY we will see more skilled people running desks and managing portolios.

I do agree on the increasing attention for the long-term particularly because most of the recent papers are focusing on eliminating any noise from the analysis in order to make the model more robust so new graduates will get a more "long-term training"
In my opinion, you can do that by looking at volatility but it will be profitable in the long run.

Unfortunately, i do not see this happening any time soon. There will be an increasing development but it won't be fast.
Also, knowing 300 different programming codes won't land you any job anymore.

You will have to know finance and applied statistics and 1 or 2 programming codes.
knowing a lot of things means you don't really master any.
That's obviously only my personal opinion