Electronic high-speed trading is an area fascinates me and matches my technical expertise (artificial intelligence), but that I've never worked in professionally. Maybe someday! Meanwhile, reading about the latest advances in electronic trading algorithms makes me think that I've probably got a lot of easy ideas that haven't yet been tried in this domain.
"System and method for prioritized automated trading in an electronic trading environment" describes a software algorithm that decides the order in which to put through a list of trades when more than one of those trades would normally be triggered after a single condition is satisfied--say, that the price of a stock drops to a pre-determined level. The patent describes what might be considered a fairly basic function of all automated trading software, which is relieving the burden of prioritizing a batch of trades that were previously queued up and are waiting for the right conditions before they're sent to the exchange.Prioritizing trades is inherently a deterministic process, unless you're trading on a so-called "dark pool" where trades are invisible the details of your trades are available more or less instantaneously to everyone watching the market. If you are moving a sufficient volume of shares and another trader can predict what your automated system is going to do next, they could swoop in and take advantage of whatever directionality you're providing in the up or down movement of a stock.
Hence a second approach, published in a patent also issued to Trading Technologies International just a few months earlier. "System and method for randomizing orders in an electronic trading environment" allows a trading strategy that is seemingly at odds with deterministic prioritization of trades. This patent describes a process that seeks to make your trades indistinguishable from the background noise of other trades so that no one can predict what you'll do next, or where the price of a stock might move as a result. If it works as advertised, there is the possibility that no one would even know you are trading that stock.
Scheduling algorithms are a huge field in artificial intelligence, and random scheduling is one of the first things you should always try. If financial software developers are just figuring that out, maybe I'm in the wrong field.
