If other traders are being aggressive – for example, by attempting to undercut others – it raises its game to trade even more aggressively. If trading is less competitive, the software acts less aggressively and calmly aims for the biggest profits available.

Secondly, the software can also use past market trends to try to forecast future conditions. If a period of volatility seems likely, the software changes its behaviour more frequently, meaning it is more likely to be ready to exploit any sudden switches in conditions.

"The majority of share trading in Europe is now handled by algorithms," says Richard Balarkas, CEO of Instinet Europe a leading algorithmic trading firm. Trading software that is able to read and respond to market behaviour like a human is very desirable, he says

It reminds me of the SF book Accelerando, By Charles Stross, where the whole economy is eventually led by intelligent machines to whom human traders are not a match anymore. Economy 2.0 is a fierce competitive game between Intelligent algorithms who literally take over the market, and where humans become superfluous at best. An interesting read, and perhaps a very plausible scenario.