How Hudson River Trading Actually Uses AI | Odd Lots

In this episode of the Odd Lots podcast, hosts Joe Weisenthal and Tracy Alloway interview Iain Dunning, Head of AI at Hudson River Trading, to demystify the application of AI in the world of trading. Dunning explains how Hudson River Trading uses AI to provide liquidity to markets, making money off the spread between buying and selling prices. The conversation explores the differences between traditional algorithmic trading and AI-driven trading, the types of data used in AI models, the challenges of interpretability, and the infrastructure requirements for AI in trading. They also discuss the constraints, such as electricity and talent, and the competitive advantages in the field, as well as the balance between open-source culture and proprietary models. Finally, Dunning addresses risk management in AI trading and the role of humans in high-speed trading.