This is who you are trading against in the public markets #hedgefund #ai #janestreet #quant

the trading you guys do. Can you afford to have be running big models in the middle of making trading decisions? I think the thing to understand here is there isn't one time horizon. There are many time horizons. There are trading systems we build and trades that we do where in order to be competitive you actually have to turn around a packet in under a hundred nanoseconds and like that's a very different regime, right? You know, people sometimes talk about like, oh, can you guys write high performance stuff in no camels? Like we can, but like for this kind of speed, it's like it doesn't matter if you write in a camel or rust or C++, you can't use a CPU. You're going to be on an FPGA that's like direct wire attached to the network and you're going to be turning around the packet so fast that if you like attached in a telescope to the wire on the way in and the wire on the way out, you would see the packets start to leave before it's done being consumed. So it's like a very different, very specialized regime. But like when you're in that time regime, you really can't do very much computation. The decisions you're making are going to be very simple. And in fact, there's this kind of whole curve of trade-offs between how smart is the decision that you're making, be it a model or some other kind of maybe even like handwritten decision-making process and how fast the turnaround is. And like the right way to build an optimal trading strategy is really to have a kind of ensemble approach where for some kinds of decisions, you're making very simple decisions very quickly. For some kind of decisions, you're operating at the scale of, you know, instead of thinking of 100 nanos, maybe like a handful of mics or tens of microseconds or hundreds of microseconds or milliseconds. And in some cases, there are processes where if you can get that decision turned around, you know, in an hour or that day, that's totally fine. And you're kind of competitive on a time basis at each of these horizons. But you're making very different kinds of decisions at all of them. Maybe you can't say, but what is exactly these models are predicting? Like surely just not the next thing in the order book or maybe it is. Right. So we're definitely like dancing towards stuff that's hard to talk about. But I think the simplest and most important one that we've been thinking about, like we think about it now, but like also 25 years ago when I started at James Street, when I was building like models out of linear regression, you know, and stuff like that, like a very useful kind of thing is to predict the fair value for a thing. Like what do we think this thing is worth? And that fits in in a very kind of composable way into lots of different trading processes. That's not the only kind of thing that we use as a prediction target, but it's an important one.