From the course: The Data Science of Economics, Banking, and Finance, with Barton Poulson

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Algorithmic and human-in-the-loop trading

Algorithmic and human-in-the-loop trading

From the course: The Data Science of Economics, Banking, and Finance, with Barton Poulson

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Algorithmic and human-in-the-loop trading

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- [Instructor] It's a common trope in science fiction movies that the machines are here to take the place of the humans, and while this often works into dystopian fantasy, there are plenty of places in a real life where machines and their algorithms do a lot of the heavy lifting previously left to humans. Securities trading is one place where this change has already happened, with over 75 percent of all trades being made by machines, and so, let's talk a little bit about why that's the case, how it works, and what it means. First off, we're talking about algorithmic trading, and so, you may want to know what is that? Well, algorithmic trading is the use of computer programs, or specifically the algorithms that process the information, to evaluate and trade securities, like stocks and bonds. Another name for this is automated trading systems, and a variation on this is informally called human-in-the-loop trading. You have the possibility of the computer doing absolutely everything…

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