When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein

Random House, September 2000, 264 pages The classic image of a Wall Street market trader is someone, usually a man, on the trading floor, shouting buy and sell orders, clutching a sheaf of trading tickets. Floor traders must have an instinctive feel for trading and get by on their quick wits. They are now a vanishing species and will soon join Mark Twain's riverboat captains in extinction and myth. Modern trading is now almost entirely paperless and …

…But it might not be an impossible one. It may be that traders generally act on a limited set of rules, which could be modeled. Instead of trying to interpret news, it might be possible to use the internal characteristic of the market (increased volatility and internal trends) as triggers for the market actors. Black-Scholes and related option pricing models made a great contribution in the past. Dynamical market models may be the next regime.