Nerds on Wall Street: Math, Machines, and Wired Markets

7.7. Information Flows and Displays in MarketMind and QuantEx

The purpose of MarketMind programs is to put alarm indications on the screen when the conditions described by the trader occur. The screen alarm indicator is just a group of upward- or downward-pointing green or red arrows. The more arrows that appear, the more strongly the conditions are indicated. For example, a highly overvalued option would show up with five green up arrows. A highly undervalued option would have five red down arrows next to its symbol.

But there are many more options to watch than there is room to display them on the computer screen. Traders aren't really interested in the options with no arrows at all or only a single up or down arrow. So out of the many thousands of listed options, MarketMind sorts out those with five arrows (in either direction) and puts them on top of the display window, followed by the four-arrow indications, then the threes, and so on.

All of this is updated continuously as the option prices, stock prices, and valuations change in real time. The machine effectively watches thousands of charts (of fair value versus price) at the same time and tells the trader which are worth looking at.

This is a single, simple example. MarketMind doesn't have to look at options. The alarms can deal with liquidity indications for traders and market makers, or anything else you can calculate using real-time and historical market data, in combination with any other data you choose to bring into ...