Ep. 27: Scott Patterson Interview with Michael Covel on Trend Following Radio

Michael Covel's Trend Following

Michael Covel

Business, Investing

4.6 • 732 Ratings

🗓️ 21 June 2012

⏱️ 55 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

My guest today is Scott Patterson, an American financial journalist and bestselling author. Patterson has made a career of reporting the subterranean inner-workings of the markets, writing for the Wall Street Journal, Rolling Stone, and Mother Earth News. His first book, The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, was released in 2010.

The topic is his book Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System.

In this episode of Trend Following Radio we discuss:

Trace the history of high speed trading and electronic communication networks (ECNs) back to Josh Levine, who founded Island, the computer system that led to the high frequency trading we see today
Technological revolution behind Island, and how its transparency led to dark pools - opaque markets where bids and offers are not made public
Patterson goes on to propose that the entire market has gone dark
The relation of dark pools to the flash crash
The regulation of dark pools
How the real New York Stock Exchange is in a data center in the countryside of New Jersey

Jump in!

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I'm MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I'm proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show.

To start? I'd like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/

You can watch a free video here: https://www.trendfollowing.com/video/

Can't get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast

My social media platforms:
Twitter: @covel
Facebook: @trendfollowing
LinkedIn: @covel
Instagram: @mikecovel

Hope you enjoy my never-ending podcast conversation!

Transcript

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0:00.0	This is Trend Following Radio, where great thinking comes alive.
0:10.9	Nobel Prize winners, legendary traders, bestselling authors, and the pros that know what drive us irrational human beings.
0:21.2	I am your host, Michael Coval.
0:24.0	Not filtered, raw, honest.
0:27.4	That's my passion.
0:33.4	So today on the show I have Scott Patterson,
0:36.3	and Scott's going to bring a really different perspective
0:39.8	to my show because I think what Scott's really done a lot of homework, a lot of research on is
0:45.6	the subterranean bowels of markets and quite a bit of experience. His prior book was called
0:51.8	Quants, Wall Street Journal Reporter, has written for Rolling Stone. His newest book was called Quants. Wall Street Journal Reporter has written for
0:55.0	Rolling Stone. His newest book, something I really want to get into because frankly, I'm probably
1:00.6	like a lot of people out there. I just don't, even though I write about Wall Street and finance,
1:05.0	I don't follow this subject. But his new book is called Dark Pools, High Speed Traders, AI Bandits,
1:10.2	and the threat to the global financial
1:11.7	system, which is fairly daunting and scary sounding, Scott.
1:16.6	Yeah.
1:17.6	Well, you know, I started looking into this stuff a couple years ago when I was a reporter at the Wall Street Journal and
1:29.4	high-frequency trading, which is something I really look at a lot in this book, was
1:36.3	becoming really, you know, a hot topic. And at first I thought, you know, this is, what's wrong
1:42.1	with this? Because there were some critics, and it seemed, you know, like it was helping the market.
1:48.5	And I really didn't think that there was, you know, much wrong with what was going on.
1:54.7	But the more I learned and the more I actually learned about how this stuff worked and what was going on across the market and
	...

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