> In general, the speed wars are over and everyone is reaching deep to become as smart as possible. Or in the other words, just being fast is no longer an edge, it's a commodity.
I'm curious what the best techniques for being "smart" are when you have to have such quick turnaround. Are these rules-based techniques, statistical but interpretable, or black box?
I would say all of the above, with a general transition from rules -> statistical -> black box as time goes on.
But you're right that being fast and smart is pretty hard. You almost always have to sacrifice one for the other. Different firms operate on different spectrums of this speed vs smarts divide: some are faster and dumber (relatively), some are slower and smarter. But everyone is trying to up skill (analogous to moving up on the value chain), because the markets have gotten fiercely competitive at the nanosecond to millisecond scale, especially on american venues (CME for example is a straight shark tank).
I am so glad for all this work that HFTs are doing, let's me buy ETFs and all kinds of things cheaply. But maybe not now, I need the valuations, rates, risk premia to get a little more attractive. Maybe even next year, who knows when's the next March/April 2020 coming. I am hoping for a much better selloff next time!
I'm curious what the best techniques for being "smart" are when you have to have such quick turnaround. Are these rules-based techniques, statistical but interpretable, or black box?