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Computers to replace Traders

  • #21
  • Jan 12, 2007 2:49am Jan 12, 2007 2:49am
Quoting Keys
The human brain isn't that special, you have a neural net in your skull and you can have one in a computer case as well.
I beg to differ. The human brain is the most complex aggregate of matter in the known universe-a "neural net" with a QUADRILLION connections. I've been listening to this "computers replacing humans" stuff for years. I think it will happen for things like arbitrage in terms of execution, but like someone else said, who makes the algorithms?

Psychology rules the markets and that's one thing a computer will not grasp in our lifetimes at least.
  • #22
  • Jan 12, 2007 4:50am Jan 12, 2007 4:50am
Man made computers..computers never made a man..Just over a decade back...no one even thought of computers like the way we do now.

Can anyone think of using PC before 1995 with UNIX, DOS..Impossible in our day today life. PC's were just meant for r&d.

All thanks to Bill's ways and Windows..We have PC which can be used by normal people not just by acadamics and MIT's.

Windows 95 changed everything...He May have copied everything from CVM ..He may not have anything original to offer..BUT he is a one trully good businessman..he knows how to sell..he is smart..shrewd and tactfull..

Microsoft may not have anything original..but hell..these harvard guys know how to make billions..making others to work

Anyway..hate or love Bill..BUt he would be the only man who changed the face of computers.
  • #23
  • Jan 12, 2007 5:15am Jan 12, 2007 5:15am
Quoting bundyraider
I'm more worried about mass algorithm trading by the big boys ruining the tradable patterns.

mass algoritm trading will create the biggest pattern of them all. There already is algorithm trading and it works to certain extents but more so because of constantly adjusted, updated factors and settings. Either way, the human factor is still necessary, even though there are algorithms that adjust,etc. This multiplied out to a mass scale will just create the necessity to adjust and adapt faster and faster, requiring better computers and better algorithms. The size of the pie, however, will be the same with or without it.

By the way, have you ever set up grandmaster vs grandmaster on your comp. All ties. Comps will never have that advantage over humans, we are not rational or logical. let them build their massive positions with more confidence and the tradable patterns will emerge.
Man who scratches ass should not bite fingernails
  • #24
  • Jan 12, 2007 5:40am Jan 12, 2007 5:40am
Quoting Far From Average
I beg to differ. The human brain is the most complex aggregate of matter in the known universe-a "neural net" with a QUADRILLION connections. I've been listening to this "computers replacing humans" stuff for years. I think it will happen for things like arbitrage in terms of execution, but like someone else said, who makes the algorithms?

Psychology rules the markets and that's one thing a computer will not grasp in our lifetimes at least.
So you don't think they can make an artificial neural net with 2 quadrillion connections? If you agree the only difference is the number of connections, then we are on the same page. Lets just buy tons of off the shelf PC parts and make a giant cluster. Don't stop until you can operate a neural net big enough so you're satified.

I've been listening to this "computers replacing humans" stuff and from what I see, they are. Which I see as a good thing.
  • #25
  • Jan 12, 2007 8:01am Jan 12, 2007 8:01am
Quoting Far From Average
Psychology rules the markets and that's one thing a computer will not grasp in our lifetimes at least.
Word!
-soso
  • #26
  • Jan 12, 2007 8:24pm Jan 12, 2007 8:24pm
With the tech advancments we have seen in just the last 20 years who can predict what programers are capable of.
20 years ago a friend of mine who is a telephone operator argued with me that phone personel would always be needed because computers could never service people effectivly.
Our world is going to change rapidly from here on in .
Survival of the fitest is natures way . Unfortunatly the fitest of the future will be those with the dollars to buy computer technology I think.
just my 2 cents
  • #27
  • Jan 12, 2007 11:28pm Jan 12, 2007 11:28pm
Computers will continue to have their place in trading. The Renaissance hedge fund does high frequency trading and quadrupled their fund and it would not have been done without computers since they are in and out of the market 100-1000 times a day in multiple markets. Complex systems will be best done with computers while simpler systems can be done with traders. Anyways computers need humans to give them the instructions so youll always need traders who have new ideas and wrinkles to a trading strategy. Also computers cant program themselves so they need people. There is so much interaction btwn people and computers that the area of finance will always need humans. Just be prepared to adjust your role.

On another note: Computers are much faster at calculations but they still cannot perceive the world more than a snail perceives the world. I think it is because the limitations of computer code. Only way they can beat us in the area of perception and consciousness is to process info just like we do and that means a totally different way of looking at computer code. If you can exactly imitate how the brains processes information then perhaps computers can perceive like how we perceive. Until that happens I just dont see the logic gate based structure of today's computers beating us in perception and consciousness.
  • #28
  • Dec 8, 2007 11:54am Dec 8, 2007 11:54am
I have read the posting made by some traders to this thread.

I would like to add the fact that people have been trading for many centuries now. People did not have computers at first, then they started using early versions of computers and now most of the traders are using laptops or PCs.

With the large number of traders out there, the Forex markets cannot change randomly. If the large financial institutions decide to replace their current trading staff with computer generated systems, then what they will be essentially doing is replacing the people that enter orders for them. People will still be needed to develop trading programs and monitor trades. Also they will need people who are knowlegeable about trading to over-ride the sytem trades when need arise.

I believe that these efforts by financial institutions are largely to increase trading efficency and reduce trading costs. Overall the trading enviornment shall remain the same. As for the retail traders they will find trading charts/patterns to remain largely the same. But to their advantage more user friendly 'algo' platforms will emerge as platform vendors would take the opportunity to cater to this "retail" market segment.
  • #29
  • Dec 8, 2007 1:05pm Dec 8, 2007 1:05pm
Perhaps if banks do use more automated trading, which I believe they will, I believe it will be to our - the small speculators' - benefit because more crisp patterns will emerge since they'll be moving price a lot more. And we have our visual to act as our edge.
  • #30
  • Dec 8, 2007 2:16pm Dec 8, 2007 2:16pm
Quoting bundyraider
I'm more worried about mass algorithm trading by the big boys ruining the tradable patterns.
Many an index futures trader would strongly suggest that this has already occurred in their market. This is evident in the decline of volatility over the years to record low levels. Daily ranges/ATRs have collapsed from years ago. The spikes in the VIX we've seen in August and November of this year have been a blessing for them.

Quoting notouch
In the currency markets the vast majority of liquidity isn't created by speculators but by businesses and individuals who actually need to exchange currency for commercial reasons.
This is incorrect. I don't have the figures in front of me (you can check the BIS triennial survey), but speculators make up the vast majority of FX volume.

Quoting SunTrader
The big boys computers right now can handle simple index arbitrage, order matching and keeping a orderly market by scalp trading.
Computers have been doing that since the 80s. Quantitative algorithmic trading today is quite a bit beyond that level.

The trend towards 100% algorithmic trading at the institutional level is only accelerating. If you peruse the financial help-wanted section for NY/London, nearly every position is looking for quant programmers, PhD preferred, etc. If anyone should question their motives, look no further than the great Jim Simons. He employs an army of mathematical geniuses like himself, and his returns over the past 25 years have decimated the competition.

Quoting candlesticks
As for the retail traders they will find trading charts/patterns to remain largely the same. But to their advantage more user friendly 'algo' platforms will emerge as platform vendors would take the opportunity to cater to this "retail" market segment.
I agree with this. This year we've seen expanding ATRs in nearly every currency pair, this has increased the trading possibilities exponentially. Meanwhile, the marketplaces(ECNs), APIs, and platform options have all continued to expand for the retail systems trader.
  • #31
  • Dec 8, 2007 4:16pm Dec 8, 2007 4:16pm
hmmm.... this would make market movements much more predictable actually, take those computer triggered carry trades a few weeks ago...

rudenstein
  • #32
  • May 14, 2009 10:53am May 14, 2009 10:53am
NEW NFA RULES....... my view:

The new NFA rules that prohibit HEDGING go into effect starting next week.

Some time back I had expressed my opinion on the impact auto-trading (see below). With the new NFA rules I have to say that one reason why they are doing away with HEDGING is perhaps to limit the number of traders using a 'black-box'. I am not sure how successful these auto-traders were but by the looks of it they must have been pretty successful. Of course this is my view, but I think there is some merit to it.


Quoting candlesticks
I have read the posting made by some traders to this thread.

I would like to add the fact that people have been trading for many centuries now. People did not have computers at first, then they started using early versions of computers and now most of the traders are using laptops or PCs.

With the large number of traders out there, the Forex markets cannot change randomly. If the large financial institutions decide to replace their current trading staff with computer generated systems, then what they will be essentially doing is replacing the...
  • #33
  • May 14, 2009 11:31am May 14, 2009 11:31am
Quoting Keys
I think markets will behave more wildly when automated trding becomes a perfect science. Personally I think there is already a lot of automated trading going on and it is proving a success. I wouldn't count on this trend reversing and going the way of the solo human trader. Human traders will need to use these algorithms to their benefit.

I also think automated systems would perform great on NFP. A computer calculating per tick using an algorithm backtested with past NFP data going back years. Those fast moving conditions are tough for humans to...
lol what? "markets will behave more wildly when automated trading becomes a perfect science" how can a accurate, perfectly scientifical program call a wild random market? if anything, the market will even out. you'll have a computer buying for a hundred pips, and another selling for a hundred pips, then the first one buying again. when a machine becomes involved, and they are left to create their own processes and methods, or in this case how the market moves, it will eventually become more repetitive and predictable. the machines will make it as efficient or easy as possible. so what you'll see is a bunch of very predictable ranges and eventually, those ranges will decrease until they are almost totally untradeable except by computers.

so no. it wont become wild and unpredictable, it will do the total opposite. but it will do it in a way that makes it near impossible for human traders clicking a mouse to trade it.

also, the more that banks and institutions start to use programs, the more that the manual trading style banks and institutions will have to use programs in order to keep up.

but, this isnt happening anytime soon. you can say these guys are doing this all you want, but they aren't. automated trading is so unpredictable and unreliable right now that no one can use it effectively in the forex market. you can however, use it in the stock market. but most of those programs just buy anyways. something anyone with an ounce of brain matter can do. so nothing fancy there.

i've been on three seperate trading floors at one bank and two large institutions/brokers. none of them mentioned an automated trading system. and the bank was one of the largest in the business.

this is just more of the fear-mongering we've become used to in western society. just keep trading until you cant anymore. there's no point in wondering what's gonna happen in thirty years. most of us wont even be trading anymore by that time. i sure as heck am gonna be retired by then lol.
  • #34
  • May 14, 2009 11:59am May 14, 2009 11:59am
Quoting blacksun1
automated trading is so unpredictable and unreliable right now that no one can use it effectively in the forex market
This is absolutely not true.
  • #35
  • May 14, 2009 12:35pm May 14, 2009 12:35pm
Quoting BlackMage
This is absolutely not true.

it absolutely is. if it wasn't everyone would be doing it or we would at least hear about people developing this super cool new trading algorithm that everyone wants to buy. but they aren't. i'm not saying it cant one day be efficient and reliable, but at the moment it isn't. and i'm not talking about the EAs that everyone likes to develop, because i've seen them work, but only for limited times and never just by themselves. i'm talking about these so-called "super trading algorithms" that trade entirely on their own that all the big guys supposedly use.

they just dont work and they wont replace us anytime soon. that is a fact, and you can dispute it all you want, but there it is. come back to me when you find an algorithm that will consistently make me money during all market conditions over a large amount of time. then we'll talk.
  • #36
  • May 14, 2009 12:54pm May 14, 2009 12:54pm
the groundwork for TERAHERTZ cpu's has been laid and it's only a matter of time before cpu's can process more data faster than a human brain per second. Even WITH multitasking.

Since humans move the market in forex..what would happen if Puters were ones moving the market?

Forex Magadroid robot has been claiming it works in any market condition..
the results so far have been interesting
(I don't have it)
taking series 3 and 34
  • #37
  • Last Post: May 17, 2009 7:12am May 17, 2009 7:12am
Quoting blacksun1
they just dont work and they wont replace us anytime soon. that is a fact, and you can dispute it all you want, but there it is. come back to me when you find an algorithm that will consistently make me money during all market conditions over a large amount of time. then we'll talk.
It is merely a question of semantics. What is "automated trading"? As you already pointed out we are not talking "EA's" here... High frequency strategies like market making is mostly automated because they are very sensitive to latency and therefore lend themselves to be more efficiently executed by computers. The same goes with high frequency arbitrage strategies. As long as these strategies remain competitive, they fit your definition above.
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