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Predators on the Prowl For Algo Opportunities

Traders Magazine, January 2005

Peter Chapman

Are traders getting hosed by algorithms? A new study contends that the indiscriminate selection of algorithms by the buyside drives up trading costs. Pros who opt for certain "nave" algorithms risk tipping off predatory traders. Algorithms that trade blocks in a nave, or non-random, fashion can be "reverse engineered" by these other traders.

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