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An Edge In The Markets

  • #101
  • Apr 25, 2011 1:20pm Apr 25, 2011 1:20pm
Quoting Custos
Of course these are all assumptions. Why you expect anything else than assumptions? We are talking about a possible future, not about a certainty.
OK, I see. It sounded to me like you were convinced of this future scenario, and I would then be interested in the grounds for your belief.
  • #102
  • Apr 25, 2011 1:22pm Apr 25, 2011 1:22pm
Quoting Adal
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.
Exactly my point. So no evidence of computers replacing humans. Which isn't to say that there aren't successful algos. Of course not.
  • #103
  • Apr 25, 2011 1:24pm Apr 25, 2011 1:24pm
Quoting Rikers
last time I checked this is exactly HFT or do people confuse it with algo trading?
I thought the discussion here was the hypothesis put forward that computers would completely replace humans, and that's what I responded to.

Then one finds oneself being asked to defend statements one didn't make about topics one had no intention of discussing...
  • #104
  • Apr 25, 2011 1:25pm Apr 25, 2011 1:25pm
Quoting medici
Exactly my point. So no evidence of computers replacing humans. Which isn't to say that there aren't successful algos. Of course not.
Would you agree that computers replaced humans (specialists, dealers, ...) in market making?

By volume computers are replacing humans. Computers are responsible for DECIDING more trades each year.

Sure, there will still be human traders around, just like some cars are still built my men instead of by Japanese robots. But they will be the minority.
  • #105
  • Apr 25, 2011 1:26pm Apr 25, 2011 1:26pm
Quoting medici
This is the second time you ask me to defend statements I didn't make. May I polite decline?
I would if I were you.
The breaking of a wave cannot explain the whole sea.
  • #106
  • Apr 25, 2011 1:31pm Apr 25, 2011 1:31pm
Quoting Adal
Would you agree that computers replaced humans (specialists, dealers, ...) in market making?
There you have a point, but I'd say 'liquidity provision' rather than market making, which would be the whole process including customer interfacing over the phone and so forth.

Quote
By volume computers are replacing humans. Computers are responsible for DECIDING more trades each year.

Sure, there will still be human traders around, just like some cars are still built my men instead of by Japanese robots. But they will be the minority.

Sure, that's the trend. But I think that, just like most hypes, the extent of its future progress is over-estimated.

Remember the days of the Internet hysteria a dozen years ago? Yes, the internet is changing the world, but not in the way and direction many thought.
  • #107
  • Apr 25, 2011 1:33pm Apr 25, 2011 1:33pm
Quoting medici
I thought the discussion here was the hypothesis put forward that computers would completely replace humans, and that's what I responded to.

Then one finds oneself being asked to defend statements one didn't make about topics one had no intention of discussing...
lol...no defending needed

I was just wondering since HFT is in essence impossible with human reaction time(0.4 sec) if the numbers on wiki for 70+% of HFT volume is misrepresentation and they are counting algorithmic trades? That's why I ask where the info you state is coming from.
  • #108
  • Apr 25, 2011 1:38pm Apr 25, 2011 1:38pm
Quoting Rikers
lol...no defending needed

I was just wondering since HFT is in essence impossible with human reaction time(0.4 sec) if the numbers on wiki for 70+% of HFT volume is misrepresentation and they are counting algorithmic trades? That's why I ask where the info you state is coming from.
It comes from contacts with people in the industry here in London.
  • #109
  • Apr 25, 2011 1:56pm Apr 25, 2011 1:56pm
the reason why robots simply cannot be the sole players in the forex market is.

we are not dealing in a market where the sole participants are traders.
no everyone in the forex market is actually placing trades, I REPEAT IT IS NOT A MARKET OF TRADERS.

no everyone is trading!!!!!!

why i say this, because there is an array of participants that influence this market in many different ways, whether they might be trading or not is up to discussion but they dont sit there and place trades for profit looking at charts.
some people dont even know they are in the market.

Central Banks: these banks are concerned with the elasticity stability, value, inflation and overall exposure of the economy. they intervene through open market operations to control inflatory pressures, diversification, and many different things. THESE are the controlers of the market, they decide where to take their currencies, they will protect, devaluate, or strengthen it, according to the monetary policies and overall economic performance of the market. Do you really think that nations will let us traders trade the currencies freely? the volatility of the currancies is actually minor we are talking about pips, if the US did not like the way the dollar is moving do you think an intervention would not happen. They wont be expose to us ruining their economies for our own capital gain.


HEDGE FUNDS, INSTITUTION, CORPORATIONS, some trade as part of their portfolio, some dont, investors always want safety, stability and higher returns, so billions of dollars might be going to higher yielding accounts outside the US and not necessarily being traded. BIG multinational transactions also take place from one country to another.

turist change their money in order to buy goods and services
so do we spend money, when stocks crash and people are risk averse they hold cash that is also a forex transaction.

and im tired and gotta do paperwork so i wont really go into much detail or continue. but think about that. it is not traders exploiting and constantly moving and manipulating price, its ENTIRE ECONOMIES AND THE OVERALL TRANSACTIONS IN SAID CURRENCIES.
AVT INVENIAM VIAM AVT FACIAM
  • #110
  • Apr 25, 2011 3:28pm Apr 25, 2011 3:28pm
For me, trading breakouts of specific timed ranges provides a definite edge. The key is to find that strategy that suits your personality, refine it and consistently apply that strategy within strict risk management boundaries.

www.forexnetworth.blogspot.com
  • #111
  • Apr 26, 2011 11:40am Apr 26, 2011 11:40am
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...
So I went and read a little about algorithmic trading on Wikipedia. I can't say much about the sources and the quality of the information because quite frankly I was too lazy to click through all the citations. However, what I read seems to back up what medici's contacts in London are saying.

Quote
Algorithmic Trading is widely used by pension funds, mutual funds, and other buy side (investor driven) institutional traders, to divide large trades into several smaller trades in order to manage market impact, and risk.

Sell side traders, such as market makers and some hedge funds, provide liquidity to the market, generating and executing orders automatically.

A special class of algorithmic trading is "high-frequency trading" (HFT), in which computers make elaborate decisions to initiate orders based on information that is received electronically, before human traders are capable of processing the information they observe.

The key here seems to be not to confuse algorithmic trading, which is used for better execution, with high-frequency trading, which is mostly computers acting on their own. Furthermore, the profitability of HFT is said to vary dramatically from program to program and even then there are the problems of 'system death'. The algo topic is largely outside the scope of this thread so I would direct anyone interested in it to use Google and see the Wikipedia article.
If you don't risk, you don't ever have to lose.
  • #112
  • Apr 26, 2011 12:52pm Apr 26, 2011 12:52pm
Quoting bug
The key here seems to be not to confuse algorithmic trading, which is used for better execution, with high-frequency trading, which is mostly computers acting on their own. Furthermore, the profitability of HFT is said to vary dramatically from program to program and even then there are the problems of 'system death'. The algo topic is largely outside the scope of this thread so I would direct anyone interested in it to use Google and see the Wikipedia article.
You should also not confuse all trading in which computers act on their own with HFT. There are a lot of 100% automated trading systems which are not HFT, which act on timespans of days or months - for example automatically reading and interpreting required financial documents submitted to SEC.

I'll end my part with a quote from the creator of Oanda:

http://i.imgur.com/M1kDE.png
  • #113
  • Last Post: Apr 26, 2011 1:00pm Apr 26, 2011 1:00pm
Quoting Adal
You should also not confuse all trading in which computers act on their own with HFT. There are a lot of 100% automated trading systems which are not HFT, which act on timespans of days or months - for example automatically reading and interpreting required financial documents submitted to SEC.
I have made no such claims.
If you don't risk, you don't ever have to lose.
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