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

Part I: Wired Markets

Not too long ago, going to a stock market meant you would meet lots of new people who were energetically shouting, running around, and making a mess with great quantities of paper. No more. Visiting a financial market now is more like visiting a telephone exchange. Computers and network gear hum in racks. Fans blow. Rows of tiny lights flicker. Occasionally someone shows up to replace a disk.

Technology did not suddenly transform our markets. It has been a gradual process, and understanding how we got here, and the simpler machines we used along the way, provides insight into today's complex markets. In that spirit, the first chapter in this part, an illustrated history of market technology, gives an informative perspective on today's wired markets.

Computers make a dramatic entrance into financial markets at the conclusion of Chapter 1. "So how did that work out?" you might ask. The second chapter answers that question, surveying some of the greatest technological hits influencing the markets.

Electronic markets are at the top of our greatest hits list. They are about the mechanics of trading, that is, the implementation of investment decisions (in contrast to actually making those decisions). Chapter 3, "Algorithm Wars," is a more in-depth view of one of the most dynamic areas in electronic markets.