IBM's Watson launched itself from techno-obscurity to worldwide fame when it beat Ken Jennings and Brad Rutter, two top Jeopardy champions, in a highly publicized match that riveted technophiles and technophobes alike. A natural question on Wall Street is whether Watson can conquer the markets like it conquered the Jeopardy champs. To be sure, there's a lot of nonhuman competition on Wall Street. But surely, there a role for Watson.

Securities Technology Monitor notes the views of two experts who think that Watson has a future in research and arbitrage. Sorting through huge amounts of text and "unstructured" information will be Watson's forte in trading, one says. As in medicine, there is simply too much information for any human to keep up--which will become Watson's responsibility. And why wouldn't a hedge fund want to take advantage of such digital brainpower to sift through unimaginable amounts of raw data. This will take "such analysis, already starting with applications for instance from Titan Trading, to higher, broader and wider use."

Hedge funds might also want Watson to help "find minute price differences in stocks or other securities on multiple markets" and then find a way to take advantage of them.

It all sounds good, but it really boils down to a software problem, which will not be trivial. You need to program the brain, and for that, IBM may need some help. Still, if IBM ever decides to get into the trading game, it'll probably be because it thinks Watson will help it win. Would you bet on it?

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