Not in the sandbox

To be sure, HFT-oriented startup funds like Domeyard are facing obstacles that seem increasingly insurmountable, as the Wall Street Journal pointed out earlier this year. More banks have opened their own HFT arms, arbing away some of the profitability of industry pioneers like Virtu Financial.For their part, Domeyard’s founders hope to find an “edge” by relying on “sequential machine learning and making large scale computations of statistics.”

Large scale statistics means teasing out the long shots, rare events.  

Too many swans between the bet and the payoff.  The sandbox only computes as long as the agent feels certain, and the edge is barely available for the hedge fund.    They are stuck with a limit, trade book uncertainty.