www.scottpluschau.blogspot.com
HFT/Algo's (Knight Capital): Side story post today:
These are headlines I see this AM...
Knight Capital see's pre tax loss of $440 million. Capital base has been severely impacted. Knight Capital falls 40% in premarket trading. Software has been removed from company systems.
I strongly believe the greatest trading system in the world is a discretionary one with strict rules for "Money Management", "Trade Management", and "Risk Management", that enable a trader to be systematic or mechanical in his approach.
It still amazes me that trading firms want quants and computer programs to hire as futures traders. It is a zero sum game. The basic math say's there has to be an enormous number of them that have as bad or as destructive a performance as a rookie impulse trader. With the chance that you get what Knight Capital just did when things go really wrong.
Scott
