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An Edge In The Markets

  • #81
  • Apr 25, 2011 11:45am Apr 25, 2011 11:45am
Quoting Pipalicious
Spot on. But I do think it will be sooner than later. It is already ocurring.

It will get to a point the 'jobs' will belong to those with ingenuity and those who can continually improve so called bots.

Frankly I think its pretty exiting!
the only problem is the entry bar will be so much raised that if you want to be profitable the only way is to work for them. Naturally, after you get a debt of 200k on scholarship from the same people that are hiring you.
  • #82
  • Edited 12:22pm Apr 25, 2011 11:53am | Edited 12:22pm
Hi Everyone,

From my current learning experience, the Edge begins to form when one begins to find their method and stick to it; that's strategy, your charts, and goal. Only then will someone improve when they keep poking holes at their own method. I found and stuck with several strategies, stuck with a couple of charts / setup, and chose a goal or set amount of pip daily / weekly. The last point is critical in that others may think I may be limiting myself. That is true; however, I also ensure I am on the positive side daily / weekly; I rather leave pips on the table than lose them. Mistakes, I still make mistakes; however, I welcome those more at this point in order to improve. Lastly, when I began, I used to jump from charts to charts, strategy to strategy. Only when I focused on one that made sense to me did I become better at my end goal of becoming a trader.

Thanks and take care.
  • #83
  • Apr 25, 2011 12:10pm Apr 25, 2011 12:10pm
Quoting Dad
Hi Everyone,

From my current learning experience, the Edge begins to form when one begins to find their method and stick to it; that's strategy, your charts, and goal. Only then will someone improve when they keep poking holes at their own method. I found and stuck with several strategies, stuck with a couple of charts / setup, and chose a goal or set amount of pip daily / weekly. The last point is critical in that others may think I may be limiting myself. That is true; however, I also ensure I am on the positive side daily; I rather leave pips...
if daily targets work for you then that's good. I can just speak from personal experience. You can't force the market to give you out pips daily or even weekly. I think monthly to quarterly targets are great. They take off the pressure to have to perform each and every day/week and put everything into perspective.
  • #84
  • Apr 25, 2011 12:11pm Apr 25, 2011 12:11pm
Quoting Pipalicious
Spot on. But I do think it will be sooner than later. It is already ocurring.
Where? In the fx market?

Quote
It will get to a point the 'jobs' will belong to those with ingenuity and those who can continually improve so called bots.

Frankly I think its pretty exiting!

So do you think that human psychology will be rationalised out of the markets?
  • #85
  • Apr 25, 2011 12:24pm Apr 25, 2011 12:24pm
Quoting medici
So do you think that human psychology will be rationalised out of the markets?
Actually I don't think so. I want something, you want something, somebody else wants something else,...
We all have different intentions and aims, we look at different time-frames, strategies, hedging, speculation, trading, in an environment with imperfect information.

I don't know but I think any intelligence would act similarly to how we act nowadays, just that programs would be far more efficient at it, since they would be able to process everything at once. That is why they would kick out the human traders, cause humans would be too slow, thinking not complex enough and make too many mistakes.

For example, humans only can see linear relationships. To detect non-linear relationships it requires you to use really good programs already. Programs could do that automatically thus they are more efficient.
  • #86
  • Apr 25, 2011 12:34pm Apr 25, 2011 12:34pm
Quoting medici
Where? In the fx market?
Currently HFT which in itselfs is just bots taking trades at hyper speed, as you already know.

Quoting medici
So do you think that human psychology will be rationalised out of the markets?
Psychology will never leave the markets even when/if they are fully traded by bots simply because in order for a 'bot' to exist a human has to build it and tweak it to exploit certain behaviors.

So <IF> a market where fully traded by bots they would still be trying to exploit each others programed behavioral patterns.
  • #87
  • Apr 25, 2011 12:37pm Apr 25, 2011 12:37pm
Quoting Custos

I don't know but I think any intelligence would act similarly to how we act nowadays, just that programs would be far more efficient at it, since they would be able to process everything at once. That is why they would kick out the human traders, cause humans would be too slow, thinking not complex enough and make too many mistakes.
Lots of bold assumptions there. So human intelligence and action would the pinnacle of universal perfection if it weren't for the slow processing speed of our brains?

Reminds me of Leibniz' statement that drew so much ridicule...

Quote
For example, humans only can see linear relationships. To detect non-linear relationships it requires you to use really good programs already. Programs are just more efficient.

What do you mean? Any evidence supporting this? And what's the relevance to trading? Currently, it seems to me that figuring human psychology out is the key to success - not spotting non-linear relationships that my brain is too slow to detect. No?
  • #88
  • Apr 25, 2011 12:41pm Apr 25, 2011 12:41pm
Quoting Pipalicious
Currently HFT which in itselfs is just bots taking trades at hyper speed, as you already know.
Yes, but it seems like you are over-estimating the importance of that when you are saying that the shift to non-human trading is already occurring. HFT isn't very large...or about to take over.

Quote

So <IF> a market where fully traded by bots they would still be trying to exploit each others programed behavioral patterns.

Who will make design decisions about those bots? Who will decide when to turn them on and off? Who will assign funds to them to trade with?
  • #89
  • Apr 25, 2011 12:48pm Apr 25, 2011 12:48pm
Quoting medici
HFT isn't very large...or about to take over.
As of 2009, HFT firms account for 73% of all US equity trading volume. Ready or not here I come.
  • #90
  • Apr 25, 2011 12:49pm Apr 25, 2011 12:49pm
Quoting medici
Lots of bold assumptions there. So human intelligence and action would the pinnacle of universal perfection if it weren't for the slow processing speed of our brains?

Reminds me of Leibniz' statement that drew so much ridicule...



What do you mean? Any evidence supporting this? And what's the relevance to trading? Currently, it seems to me that figuring human psychology out is the key to success - not spotting non-linear relationships that my brain is too slow to detect. No?
Of course these are all assumptions. Why you expect anything else than assumptions? We are talking about a possible future, not about a certainty.

Yes, good example for our too slow processing speed is actually the auto pilot when flying. If it weren't for the autopilot always adjusting to the current winds, you would have a really rough ride in your seat as a passenger. Here programs are already used, cause they can process wind information faster and make decisions faster.

Well, complex non-linear relationships require you to be a good mathematician or scientist to detect them, cause they are not obvious and mostly not logical at first. But in general you would always be wiser to use a program, cause it is faster in detecting it.
The only thing which a program still needs is the inputs to find these non-linear relationships. Once programs are complex enough they can find the inputs themselves and just learn for themselves.
Easy linear relationships: the less power you consume, the less you have to pay for it. The further we are away from the sun, the colder it will be,...

Maybe I am totally wrong here, so please correct me, if you have better knowledge about that subject.
  • #91
  • Apr 25, 2011 12:52pm Apr 25, 2011 12:52pm
Quoting Rikers
As of 2009, HFT firms account for 73% of all US equity trading volume. Ready or not here I come.
Yes, but that's mostly for executing manually decided orders, so not much of human decision making being eliminated there...

And the fx market is very different...
  • #92
  • Apr 25, 2011 12:59pm Apr 25, 2011 12:59pm
HFT trading is all about placing discretionary trades?
The breaking of a wave cannot explain the whole sea.
  • #93
  • Apr 25, 2011 1:02pm Apr 25, 2011 1:02pm
Quoting Craig
HFT trading is all about placing discretionary trades?
Not all about, but mostly in relation to reported volume numbers for the equity markets.
  • #94
  • Apr 25, 2011 1:02pm Apr 25, 2011 1:02pm
Quoting medici
Yes, but that's mostly for executing manually decided orders, so not much of human decision making being eliminated there...

And the fx market is very different...
Algo is growing rapidly in FX. From the latest BIS report, it already accounts for 45% of EBS volume and HFT is 25% of whole market:

http://i.imgur.com/6LNDH.png

http://www.scribd.com/doc/49567568/1...ithmic-trading
  • #95
  • Apr 25, 2011 1:08pm Apr 25, 2011 1:08pm
Quoting medici
Not all about, but mostly in relation to reported volume numbers for the equity markets.
So you're saying the volume attributed to HFT is incorrect?
The breaking of a wave cannot explain the whole sea.
  • #96
  • Apr 25, 2011 1:12pm Apr 25, 2011 1:12pm
Quoting medici
Yes, but that's mostly for executing manually decided orders, so not much of human decision making being eliminated there...
pic or it didn't happen .... I mean where is this info coming from?
  • #97
  • Apr 25, 2011 1:13pm Apr 25, 2011 1:13pm
Quoting Adal
Algo is growing rapidly in FX. From the latest BIS report, it already accounts for 45% of EBS volume and HFT is 25% of whole market:

http://i.imgur.com/6LNDH.png

http://www.scribd.com/doc/49567568/1...ithmic-trading
Yes, but that's still 'execution methods' rather than replacement of human traders. The last time I was in touch with algo people here in London, the focus was moving from 'technical trading' type of strategies to ultra-high frequency stat arb.

So very little evidence of algos replacing humans for anything but the ultra-high-frequency.
  • #98
  • Apr 25, 2011 1:14pm Apr 25, 2011 1:14pm
Quoting Craig
So you're saying the volume attributed to HFT is incorrect?
This is the second time you ask me to defend statements I didn't make. May I polite decline?
  • #99
  • Apr 25, 2011 1:18pm Apr 25, 2011 1:18pm
Quoting medici
Yes, but that's still 'execution methods' rather than replacement of human traders. The last time I was in touch with algo people here in London, the focus was moving from 'technical trading' type of strategies to ultra-high frequency stat arb.

So very little evidence of algos replacing humans for anything but the ultra-high-frequency.
But ultra-low-latency trading by volume is 25% of the market and growing per the report.

And what better to exploit human fallacies (round numbers, S&R trading, ...) than a computer, who can watch all the market for such events.
  • #100
  • Apr 25, 2011 1:18pm Apr 25, 2011 1:18pm
Quoting medici
Yes, but that's still 'execution methods' rather than replacement of human traders. The last time I was in touch with algo people here in London, the focus was moving from 'technical trading' type of strategies to ultra-high frequency stat arb.

So very little evidence of algos replacing humans for anything but the ultra-high-frequency.
last time I checked this is exactly HFT or do people confuse it with algo trading?
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