To put it simply algorithms are a set of rules that define a sequence of operations. Think of algos as a flowchart, or a series of instructions that tell a computer what it is supposed to do. And whether you know it or not, you have access and use multiple algorithms every day.
In fact, modern life is peppered with algos to help everything from your love life to government surveillance. In this blog we’ll outline some of the most common uses and algos, and how they impact your everyday life… you’ll be amazed at how far reaching the average algorithm really is.
The Internet, Home of the Algorithm
The search engine behemoth Google is world renowned for its algorithms. The company use these processes to filter and navigate through the ever increasing internet. As well as bringing order to the chaos, their algorithms are used by Google AdWords which helps target advertising to you and becomes the most profitably arm of the Google empire in the process.
But it’s not just search engines that use algos. Your Facebook feed uses an algorithm in order to shuffle data and show you the updates it thinks you want to see. Your newsfeed is personal to you, and hopefully helps you get the most out of the service (although the falling users might suggest its not so successful).
Another site where personalized content matters is in the field of relationships. That’s right, OKCupid and eHarmony both use algorithms to filter through your details and hit you up with potential dates. In fact, online dating, and arguably the algos behind the sites, are so successful that as many as 1 in 5 new relationships start on the internet.
So What Was That About Surveillance?!
Sorry to go all Edward Snowden on you, but algos don’t just form the basis of your Google searches and Facebook feeds, they are also used by the National Security Association.
Leaked documents have revealed that there are a number of surveillance programs that are jointly being operated by the Five Eyes, an intelligence alliance comprised of the US, Australia, Canada, New Zealand, and the United Kingdom. They have been using their algorithms to collect and interpret data based on all of us, from phone calls and emails, to more worrying geographical locations and webcam images. In fact, they are probably watching you now… smile.
So while you are being watched, you should maybe watch something yourself…
You Might Also Enjoy…
Netflix has built an industry leading brand based on its algorithms. They recommend you titles, based on your selections and past viewing, which means that no two Netflix accounts will be the same. Those suggestions, thanks to their algos, will constantly change, and have helped Netflix get to the number 15 on the Forbes list of World’s Most Innovative Companies in 2016. In fact, their algos are also driven the content they fund, helping them know whether there is an audience for Netflix originals like Orange Is The New Black and BoJack Horseman along the way.
But it’s not just Netflix, another monolith of the online world also relies on algos – Amazon. In fact, every time you look at a product, their algorithms are ticking away, coming up for future suggestions for products you might want (whether you know it yet or not).
But What Are The Actual Algos, You Know?!
Fourier transforms are one of the algos that make all the above happen. In fact, the entirety of our digital world uses these simple algorithms, which transform signals from time domain into frequency domain and vice versa. Wi-Fi, smart phone, routers, satellites, computers, GPS watches, even this blog that your reading now, would not exist without the presence of Fourier transforms.
But that’s not the only algo that makes the world go…
Almost every computer function, regardless of the application, will use a data compression algo along the way. The information being compressed, whether it is mp3, zip, JPEG, databases or cloud storage, needs to follow the same rules (algorithms) to ensure that the information is compressed in a way that optimizes systems making them cheaper and more efficient in the process.
So next time you listen to a podcast or WhatsApp a picture to a friend, know that you are using data compression algos to make that possible. And know that the NSA are probably watching too…
But How Can I Profit From Algos?!
Algorithms don’t just power the digital age, they are increasingly impacting the world of trading. Previously human traders would take the time to react to moves in the market, draw on their own experience and then make a decision based on that. They would then learn from this experience, and use it to inform future trades… that’s all a bit old skool now.
Modern trading is increasingly dependent on bots, algorithms which can make and action decisions in a fraction of a millisecond which seems like an age if you look at the response times of human traders.
These automated trading systems are increasingly reaping benefits for both investors and traders, helping to thwart danger whilst responding to market moves quicker than it took to read this sentence.
Algone?
But will there come a time when algos, go? As we touched upon in our last blog, AI may be the future of algorithmic trading, but for now the proliferation of algos in our everyday life means that this isn’t going to happen any time soon.
So if you are still at work typing, or at home watching Netflix, enjoying a book on an e-reader or just chilling out with your phone next to you (yep, Facebook is probably listening… and the NSA too – “hi guys”), you’ll be using algorithms. If you’ve got a fractalgo account, you guessed it, using algorithms. They infiltrate our everyday experience, helping to streamline processes in such a way as they are here to stay. Going forward, they will continue to shape the way we communicate, relax and invest from here on out.
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