Kevin gave a great talk yesterday about High Frequency Trading. (Well, it was about lots of things but probably, mostly about High Frequency Trading.) And, afterwards, we were discussing the human role in all this. Obviously there's a human involved in designing the algorithms and presumably in setting some of the underlying trading assumptions. But the other role seems to be in deciding when to hit the kill switch. It seems these systems can trade effectively and profitably when things are 'normal' - but there are certain market effecting patterns only humans can recognise. Like there's a war coming or a big political scandal or something. When these things come up a human has to pull the plug. But, given that HFT means fortunes can be made or lost in microseconds, presumably there's a human v human edge in precisely when you slam on the brake. It's like F1 - the best drivers brake later and accelerate earlier. Made me wonder if they've got UIs and instruments designed for that. Big, red kill switches and the like.
(NB - I assume I've got all of the above wrong in some significant way. I know very little about either HFT or F1.)