Conventional wisdom suggests that markets are efficient, random walks and that stock prices rise and fall with the fundamentals of the company. How then have black-box traders prospered and how do they exploit market inefficiencies? Are their strategies on their last legs or will they adapt to the new landscape amidst the global financial crisis?
Chasing the Same Signals is a unique chronicle of the black-box industry's rise to prominence and their influence on the market place. This is not a story about what signals they chase, but rather a story on how they chase and compete for the same signals
Reviews
If you want to understand how computerized trading is impacting our markets, this book is for you.
-- Charles D. Ellis, Author, The Partnership: The Making of Goldman Sachs
The interplay between algorithmically driven and traditional trading strategies affects the returns of all investors. Brian Brown's new book provides a very clear overview of how these new strategies work and more importantly, how they influence liquidity, volatility, and prices in the global equity market.
-- Andrew J. Morton, Co-creator of the Heath-Jarrow-Morton (HJM) Framework
Technology advances over the past decade have dramatically changed the dynamic world of stock market trading. Most analysts have failed to account for this "brave new world" in their "Monday morning quarterback" analysis of the recent worldwide financial systems collapse. Brian Brown has written the first book that clearly and colorfully describes the new technologically-driven way of doing business on the Street, and he does this with great precision and street knowledge. This new world played a central role in the Wall Street collapse, and, paradoxically, will help drive the next ascent.
-- Thomas F. Coleman, Dean and Professor, Faculty of Mathematics
Director, Waterloo Research Institute in Insurance, Securities, and Quantitative Finance, University of Waterloo
Much has been made of the activities of "High Frequency Traders" during the Global Financial Crisis. In many cases they have been vilified, but often out of ignorance about the vital function that they perform in today's hyper-speed financial markets. Brian sets out to demystify High Frequency Trading and does so in an eminently readable fashion. This book will appeal to anyone, market professional or not, who wants to understand this often secretive group.
-- E. John Fildes, Chief Operating Officer, Asia, Instinet Pacific
Press release
March 04, 2010
Computerized Trading will be the Future for Stock Exchanges
The worst stock market crash since Black Monday of October 1987 occurred during the first week of August 2007. But no one noticed. On the morning of August 6th, investment professionals were baffled with unprecedented stock patterns: There was a 30% gap between the top stocks and the worst stocks, yet the index remained unchanged. It was the industry’s first world-wide panic – by machines that were Chasing the Same Signals. In retrospect, August 2007 should have been the canary in the coal mine, because it was the first sign of the economic imbalances that lay ahead.
Published by John Wiley & Sons (Asia) Pte Ltd, “Chasing the Same Signals: How Black-Box Trading Influences Stock Markets from Wall Street to Shanghai” (ISBN: 978-0-470-82488-7) investigates how “black box” (computerized) trading has come of age and the future it portends for global equity markets.
The 2007 crisis didn’t mark the demise of black-box firms but rather the opposite. They were the first to feel the impact of the financial crisis, but were the best prepared during the aftermath. Today, more than half of all market turnover are by black-boxes. This book chronicles the black-box industry’s rise to prominence and its impact on the future of stock exchange.
Highly readable and filled with fascinating insights into the world of cyber-trading, this book will not only appeal to investment professionals but also to the laymen, non-quantitative individuals curious to understand the forces influencing market volatility and the new role black-box firms bear in the market place.
