Stephanie Yang and Timothy Puko at the Wall Street Journal discuss the increasing role of algorithms in oil market here… Here is a nice chart:
Many are quoted in the article, but this one I like:
“Goldman Sachs said CTAs can create trading opportunities. “Fundamental traders shouldn’t be afraid of the CTAs, but rather view them as creating opportunities when they push markets away from fundamentals,” the firm wrote in a commodities research report from June 29.”
Fundamentals are difficult to figure out, too: http://www.zerohedge.com/news/2017-06-28/how-did-it-go-so-wrong-goldman-asks-it-slashes-oil-price-target
One more thing… There was a day when locals ruled, trading around two thirds of daily volume… Some algorithms have been written to mimic locals as market makers and liquidity providers, so they should be expected to dominate trading volume… And, of course, locals were often blamed for price moves that could not be explained by analysts…
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