A Lesson from Wall Street

by Luke 5. August 2010 10:37

I recently had the chance to spend some time talking with the founder of a startup in the financial industry. He was looking for better ways to express the decisions he wanted to automate for a hedge fund management tool. And it struck me that the finance folks must know something that the engineers haven't caught on to yet.

Look at the Rules Fest speaker lineup and see all the finance folks. What do they know the we engineers don't? The cynic might say that they know the rules to skimming profit off a transaction. That seems to be the general feeling about high-frequency trading algorithms these days. But from my experience it's more than high-frequency trading - it's about automating all the little decisions.

The simple fact is that there is money to be made and in the financial industry it's easy to keep score. But when you look deeper, it's clear that beyond simple opportunism, the financial industry has learned how to automate the simple tasks. A large trade could be made any number of different ways. But rather than have people explore the myriad of options, computers do the heavy lifting. Doing it that way makes them more money. It's that simple.

That's a lesson we engineers need to absorb. The simple fact is that we need to get more efficient and we need to keep score if we're going to stay competitive. We've gotten good as a profession at using computers to automate calculations, and the next logical step is to use them to automate the simple decisions. That will make you a more efficient engineer, and efficiency is a great way to get more business.

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