The Hour Between Dog and Wolf: How Risk Taking Transforms Us, Body and Mind

by John Coates

Anecdotal evidence and published fund-performance statistics give us something like the following scorecard: in high-frequency trading, humans and machines fought to a draw, both making historic amounts of money; in medium-term price prediction, in other words seconds to minutes, humans pulled slightly ahead of the boxes, as flow traders made record amounts of money; but in medium-to long-term price prediction, minutes to hours or days—the boxes engaged in these time horizons are known as statistical arbitrage and quantitative equity—humans outperformed the boxes, because only they understood the implications of the political decisions being made by central bankers and Treasury officials. Thus, in what may have been the first major test of human versus machine trading, humans won, but only just. And so it is that this futuristic battle ebbs and flows.