To what extent do algo's dominate the market?

I'm considering whether I want to do a career in S&T and I'm having a hard time deciding.

I love Trading. Like most on this site have pointed out, you have to live and breathe the markets and I'm sure that I do. But ultimately, I wouldn't want to join an S&T desk at a BB, specialize in an asset class and end up having that entire space being dominated by computers in a few years. Also, some on this site have mentioned (and I don't know how true this is) that there are desks that are strictly populated by agency traders. Again, I don't want to end up landing an FT offer on a desk and then have my job end up being selling share blocks. I know that there are people who live to get the best price so no offense to any agency/execution traders out there, but it simply doesn't interest me. I don't mind putting in the hours to be an execution trader when I start out but I want the ability to take on more risk down the line.

So my questions are

What is the prevalence of algo's/programs/quants on the desks? How much more important will they get in the future and what markets do they dominate? (Cash equities seems to be already taken over by them. Hell, just reading ZH makes me think computers run all the markets)

I don't mind market making, it seems like a great way to learn what moves prices and the role volume and volatility play in the markets but I also want to be able to make prop decisions. Which asset classes offer a good mix of both market making and prop decision? Ex: I think someone pointed out that some FX desks are 60% market making and 40% prop.

Comments (16)

Jun 3, 2010

fixed income will never be fully algo driven

Jun 3, 2010

They are certainly very prevalent but there are things they can't do. Are you looking to sales-trading or prop? Around here people don't seem to understand the difference.

Jun 3, 2010
Cartwright:

They are certainly very prevalent but there are things they can't do. Are you looking to sales-trading or prop? Around here people don't seem to understand the difference.

Are sales-traders the same thing as flow traders?

Jun 3, 2010
ElliotWaveSurfer:
Cartwright:

They are certainly very prevalent but there are things they can't do. Are you looking to sales-trading or prop? Around here people don't seem to understand the difference.

Are sales-traders the same thing as flow traders?

No, but that's probably what he was trying to say. Funny how he says "around here people don't seem to understand the difference," when he himself is confused.

Jun 3, 2010

nothing will be 100% algo trading

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Jun 4, 2010
balbasur:

nothing will be 100% algo trading

Here at Skynet, we believe differently.

Jun 4, 2010
IlliniProgrammer:
balbasur:

nothing will be 100% algo trading

Here at Skynet, we believe differently.

I can't think of a witty remark...i'll be back.

Jun 3, 2010

I think he meant:

"Are you interested in Sales & Trading (ie Sell Side) or Prop."

Sales-trading is a rather peculiar position, which I'm pretty positive was discussed a while back.

Jun 3, 2010

I am interested in this as well, although perhaps a bit more broadly speaking. Would like to hear what kind of traders are likely to experience a decline in numbers in the medium to long term due to technology.

Jun 4, 2010

Because of Commercial Hedgers it would be hard to believe if algos can dominate the futures markets. For instance on "flash crash" many commodities didnt budge....

Equities are already dominated by robots but there is for sure space for value investing...

Jun 4, 2010
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