In the not too distant future, you may be sitting back in your driverless vehicle heading home from work. As you consider an evening meal you might check your smartphone to see what the Fridge has got in for you. The IOT (Internet of Things) world is coming to your Fridge soon.
If like most of us, you get too busy to manage the grocery shopping in detail there will no doubt be a preference setting on your Fridge App called 'Auto-Manage'. So, now the Fridge decides!
Now, who amongst us has not picked up a 'Buy One Get One Free' offer at the supermarket only to discard the surplus item a week later when it's sell-by date has expired? Well, fret no more folks, as your smart Fridge will only avail of these offers after checking your previous consumption records and it will also send you reminders as the expiry date approaches. Once you hand over decision making to the Fridge, the scenario starts to play out like electronic trading today. We have to imagine that major distributors like Amazon, Walmart or Tesco will all be competing for the Fridge budget allocation.
So what happens now when a food producer launches a new super-food combination of avocado, kale and mango blended into a blissful smoothie with goat's milk from Bulgaria?
The Fridge needs to decide whether to eject your standard carrot and apple smoothie for this exotic new superfood. In algorithmic trading, decisions are driven by price and risk profile but the Fridge may need to analyze food properties such as calories, vitamin profiles, and probiotic goodness.
So, let's imagine our smart Fridge has evaluated the nutritional value, checked on the expiry dates and now makes the decision to buy this super-smoothie. It could just take the market price on Amazon or it could scan the market for better quotes from Tesco or Walmart. All the distributors will be competing for shelf space in your fridge and will no doubt reward loyalty with discounts and special club offers. Any new entrants in the marketplace will need clever strategies to displace the incumbent smoothie.
Another thing that drives automated trading today is information extracted from the market news. So let's imagine that our new super-smoothie is slowly gaining traction in the marketplace when Lady Gaga and Ronaldo both endorse the new smoothie and it's 'life-changing goodness'. There is a massive spike in demand driving up prices as Fridges all over the world post their orders. Automated trading can get tricky when the commodities market in Bulgarian goat's milk dries up!
Trading Operations Risk is always a concern and we have all heard of the 'Fat Finger' trade which can seriously impact a business. It gets its name from a slip-up when tapping in data on a keyboard but nowadays it applies equally to an algorithm that lacks sufficient sanity checking or is unproven in abnormal market conditions.
Now in the trading world of our Fridge it might simply be that the pump cycles of the heat exchanger interferes with network data transmission or let's imagine your cousin is just back from a trip to Moscow and has brought you the gift of a fridge magnet with a very fine view of the Kremlin.
So next time, when the Fridge orders 100g of the finest 'pâté de foie gras', and instead the Amazon drone drops off a 10kg bag of pork lard, that's what you might call a Fat Fridge event!