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stryder
Mar 23, 2015 06:44 PM
The problem with any forms of automated trading is the potential for the robot to "Panic" if the right conditions are met. If you understand it's parameters then it's possible to manipulate it in a way to create an outcome that's beneficial to yourself. This of course has a large impact when you are talking about automation in the global finance sector.
The simplest way to appraise just how devastating autonoma can be is to look at large MMOs (Massively Multiplayer Online) and see what types of exploitation occur by people that are attempting to manipulate the game worlds economy or make a quick buck off that economy in the real world.
Where one game making company might build an auction system that fits with how one would exist in the real world, there is exploitation in regards to over inflated pricing, the amount of any good or stock is potentially monopolised (An example of this was in EVE-online where it's possible to buy low and sell high in the same resource, as long as you are the first to buy you make a profit and buy out anything under your base price out of both principle and to force a greater profit margin.)
It doesn't matter how eloquent the mathematical formula a trader might use, they should consider that formula to be like an encryption algorithm to a cracker. To a cracker it's just finding that weakness, the exploitation, that point that would cause panic to financial automoma.