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  • Week 5: The problems of algo / quant trading

    During Week 2, in the text about quant trading, we saw that this type of trading may have some negative consequences.

    This week, we are going to look in details at the risks connected with the increasing use of computers in finance.

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      THE PROS AND CONS OF ALGO / QUANT TRADING


      You are going to read a text about the problems connected with algo / quant trading.


      Test your vocabulary before reading the text, then take the quiz to see if you have understood it correctly.

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      Vocabulary
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      Test your knowledge of key vocabulary from the text.

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      The good, the bad, and the ugly of algorithmic trading
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      This is an abridged version of a full article that you can read here if you are interested.

      Uploaded 18/10/20, 21:42
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      The good, the bad, and the ugly in algorithmic trading
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      THE DANGERS OF ALGO / QUANT TRADING

      We are going to look at two dangers connected with algo / quant trading: flash crashes and spoofing.

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      1. Flash crash


      Watch the video summarising the 2010 Flash Crash.
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      The 2010 Flash Crash
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      You can also watch the video here.

      Uploaded 18/10/20, 23:40
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      The 2010 Flash Crash
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      2. Spoofing

      Let's now turn to spoofing. Watch the video to understand what spoofing is.
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      What is spoofing?
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      You can check the full video here.

      Part of your homework this week is to write what you have understood in the video.

      Uploaded 19/10/20, 09:11
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      HOMEWORK


      1. You need to know and remember some key concepts to understand modern finance: algo trading / quant trading, HFT, and a flash crash.

      2. Vocabulary:

      to trigger = to provoke
      a security = a stock, a bond
      a recovery = the process of being normal again after experiencing problems


      3. Write in the forum below what you have understood about spoofing.

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      Homework
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      Make forum posts: 1

      You will NOT be able to see what other students have posted until after you post your own answer.

      You can then compare your understanding of the video to that of other students.