Inside the Black Box: A Simple Guide to Quantitative and High Frequency Trading, 2nd Edition

CHAPTER 17

Looking to the Future of Quant Trading

All evolution in thought and conduct must at first appear as heresy and misconduct.

—George Bernard Shaw

So-called black-box trading has existed for more than three decades. It is hopefully clearer to the reader that these strategies are not so much black boxes as much as systematic implementations of the kinds of things that human traders and investors have always done. Unfortunately, automation is most often received with a great deal of distress. Sometimes, this is very understandable, as in the case of job displacement where a person's occupation is being obviated by automation. Other times, ignorance is a sufficient reason for fear. In either case, I believe that the backlash against quants is, at its core, a generational issue. We are just past a point of transition in our marketplace. Automation and computerization in the markets have pretty much happened. But it's still a recent enough phenomenon that companies and individuals who are poorly equipped to participate profitably in the modern markets are bitter and vocal. But as these types of players adapt, move into other lines of work, or retire, newer participants who are perfectly happy to participate in these markets are abundant.

Looking ahead, I see a couple of interesting trends that bear watching. Markets today are undoubtedly and categorically more fair and egalitarian than they have ever been in their history. However, the level of transparency available today, ...