Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System


Scott Patterson’s Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System is as insider view of the world of Algos, HFT, and software driven markets. Patterson does a great job of taking a dark, highly complex subject as the basis for a compelling, character driven narrative. The book reveals the historical evolution of High-Speed Traders, making it easy to understand how the modern stock market is what it is today. Patterson also explains the dangerous microstructure of modern markets, how they are increasingly subject to “flash crashes” disruptions, and volatility.

Dark Pools is an up close account of the global stock market’s subterranean battles and the rise of the “bots” — artificially intelligent systems that execute trades in milliseconds and use the cover of darkness to out-maneuver the humans who’ve created them. It is a fascinating story of how global markets have been hijacked by trading robots – many so self-directed that humans can’t predict what they’ll do next. And it shows how the new players moving into artificial intelligence are on the verge of tipping the entire system toward a global meltdown that could happen in minutes – maybe even seconds.

I loved Scott Patterson’s first book, The Quants. Patterson will be speaking at TBP conference next month.

Reviews:

“Scott Patterson’s Dark Pools is about the most important financial issue no one talks about—how high-frequency traders have rigged the market.” –Mark Cuban

“Remarkable…even long-time participants in electronic markets will learn a lot from this book.” –Forbes

“Richly reported…an invaluable piece of timely journalism that should be read by regulators and anyone with a cent in the stock market…You will never look at the opening bell in the same way.” –FT

“An engaging narrative…DARK POOLS is easily the most entertaining and accessible book to cover the new world of stock trading.” –Fortune

“An entertaining account of the key battles in the “algo wars” and the colorful math geeks who fight them—some of whom are now fighting to rein in the monsters they created. Dark Pools is an alarming account.” –Canadian Business

Scott Patterson is a staff reporter at the Wall Street Journal, covering government regulation from the nation’s capital.

Full chapter after the jump.

 

 

Source: Scott Patterson’s Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System

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