

High Frequency Trading Tech For Non-Financial Problems. - aditiyaa1
http://blogs.wsj.com/tech-europe/2011/03/11/high-frequency-trading-tech-finds-other-uses/

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scott_s
The area is also called stream computing. I work on a project in this area,
which made HN a bit ago: <http://news.ycombinator.com/item?id=2442977>

Note that the above article erroneously ties the Streams project with the
Watson project - aside from coming from the same research lab, we have nothing
to do with each other. My comment on Streams from that thread:

Why I find working on Streams exciting: we're designing a language and runtime
system for a new programming model. Not just a new language (which we do
have), but a new programming model. The way you write programs changes when
you have essentially infinite streams of data coming through your system - you
have to think in terms of operators that transform or filter individual
pieces, and you have to keep in mind its inherent distributed nature. That is,
you may write a chain of operators to process your data, but each operator can
run in parallel with the others, even though you will probably design your
application thinking of one particular piece of data marching through the
system. The runtime system itself is, of course, distributed and fast. To get
an overview of this programming model, take a look at this paper: "SPADE: The
System S Declarative Stream Processing Engine":
[http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.160...](http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.160..).
Just keep in mind two things: the newest iteration of the language is called
Streams Processing Language (SPL), and that it is a complete rewrite of Spade.

If you're interested in getting a feel for the programming model, here is a
public getting started guide:
[http://publib.boulder.ibm.com/infocenter/streams/v2r0/index....](http://publib.boulder.ibm.com/infocenter/streams/v2r0/index.jsp?nav=/3_1_3)

And the language spec:
[http://publib.boulder.ibm.com/infocenter/streams/v2r0/index....](http://publib.boulder.ibm.com/infocenter/streams/v2r0/index.jsp?nav=/3_1_5)

I suppose I should put in the disclaimer that these are my views, and I do not
represent IBM.

------
apaprocki
I'm all for burning less fuel and making shipping more efficient, but I think
it is a bit of a stretch to say this particular use case is not related to
finance. Ports becoming more efficient ultimately saves oil, natural gas, and
other commodities companies money. Commodities traders are very tuned into
port congestion and global movement of ships and make lots of money trading
upon the flow of commodities (mostly oil/gas).

If this particular case is not related to finance, then how come the Bloomberg
terminal tells me there are exactly 401 ships in Rotterdam port as of this
morning, the 5 day moving average is creeping up, and 8 of the top 10 ships by
tonnage are crude oil tankers?

~~~
scott_s
In a global economy, everything is a finite number of steps away from finance.
That does not make everything in service of finance.

~~~
gaius
Finance is just a way of doing resource allocation in a quantifiable way. The
ideal scenario is that the cheapest option is also the most efficient (or vice
versa, depending on how you think about it). The finance industry is a highly
abstract way of finding the methods for creating the most wealth (for any
given definition) while consuming the fewest resources. That's called "return
on investment".

~~~
scott_s
I don't disagree with what you said. My comment was in response to what I saw
as the claim that just because something impacts the financial industry, it's
related to the financial industry in a meaningful way. That reasoning could be
applied to just about everything, which means it's a meaningless distinction.

------
johngalt
Idly I've wondered if there was a way to turn the efficient markets model on
it's head. Rather than gathering a ton of predictive information to try and
get another 2% efficiency, instead use the already efficient market activity
to predict other things. For instance if oil prices drop GM should start
ordering more V8 engine parts instead of I4. I'm sure this already happens at
some level.

~~~
eru
Yes. The Economist often quotes the prices of insuring against default of a
creditor (like Greece) as an indicator of how likely they are to go bust.

------
Symmetry
Nice to see all the resources invested by the market makers in savage zero-sum
competition having some actual use.

~~~
vecter
Please don't spout vitriol when you don't understand what you're talking
about. Trading is obviously zero-sum in wealth, but the important thing is
that it is _not_ zero-sum in utility. That is the fundamental reason that
people trade: to transfer risk. American Airlines does this every time they
want to hedge against the price of oil. The fact that there are competitive
market makers makes this cheaper for the airlines to do, and that savings in
cost is transferred to _you_ every time you sit on an airplane, go to the gas
pump, buy orange juice or wheat products, buy a car, or almost anything else.

The fact that market makers don't service _you_ directly by selling you an
apple does _not_ mean that what they do is useless.

~~~
Symmetry
I absolutely agree that trading is socially useful, and markets would be much
less liquid if we didn't have big companies ready to stand as counter-party to
whatever buying and selling smaller market players want to do. It just makes
me a bit sad that the profits that rightfully accrue to the sector are then
seemingly wasted on HFT infrastructure, a competition that doesn't seem to
provide anything useful above the standard market-making role.

~~~
vecter
* It just makes me a bit sad that the profits that rightfully accrue to the sector are then seemingly wasted on HFT infrastructure, a competition that doesn't seem to provide anything useful above the standard market-making role.

I think that's the point though: the immediate execution that liquidity offers
you is the price you pay to hedge risk. The other option is for these
companies to set up their own trading desks. For instance, suppose an airline
wanted to buy oil at a price it wanted. If the market is very illiquid,
they're less willing to cross the bid/ask spread to hit whatever wide offer
someone else is posting. The longer they have to wait, the more risk they're
at. The "standard market-making role" solves this problem exactly. It allows
them to hedge their risk at lesser cost. That is a valuable service, and that
is why market makeres exist.

