Fooled by Randomness

[nitro]

Quote from newguy1:

so there is no concensus on whether or not automated trading/computers have made trading more difficult for the average trader?

Does anyone see the future of the daytrading profession at risk? Some quants belive their days are numbered, unlike say a lawyer or doctor....anything could happen, but theres no reason to suggest either a career in med or law is at certain risk.

Is the daytrading profession at risk?

I really doubt it for say the next five years. Some already think "pure" daytrading is dead, but I think that is from most that started in the late 90's bubble years.

IMO Decimilization more than anything else is probably responsible for the death of the "pure" daytrader, not the computer automated programs. Bring back 1/4s and I think you would get an influx of traders again. All that does is raise the "toll" investors have to pay to execute though, and I doubt the SEC will go in that direction.

nitro

 

[Holmes]

Quote from newguy1:

so there is no concensus on whether or not automated trading/computers have made trading more difficult for the average trader?

After I found "my method" I discovered that these automated trading systems make my life a lot easier.

 

[illiquid]

Quote from nitro:

The only real defense that one has is to go where there are still [human] edges to be had, but that is a different premise than the one you espouse.

What else would I be espousing, if not complete faith in the fallibility of mankind?

But I understand you view the markets a certain way which aligns with the tools and manner with which you trade, and I do the same as well -- our schemata of the markets are in the end just extensions of our methods and limitations. For me, I'd put my money on human nature subsuming technological innovation. This generation may have seen its last bubble come and go, and the collapse of volatility may just as well be the inevitable aftermath, program trading or no. But I'm confident that the closer the future markets approach that automated equilibrium you envision, the greater the level of irrationality that will be poised to follow.

Can't you just picture a HAL 9000 of the not-so-distant future commenting on the next super-bubble in the markets? "Dave, we've seen this kind of euphoria many times in the past, and they've always ended in collapse. Always . . . . " :eek:

 

[nitro]

I agree with almost everything you say that we do tend to see a nail when our tool is a hammer, but I disagree with one exception: That volatility has to come back, at least in the form of a "bubble" like we saw in the late 90's early 2000s, and it's aftermath in the couple of ensuing years.

There is no question in my mind that this low volatility environment can easily be dominated by computers, and I doubt that any human being can take on a computer in this environment and make extraordinary profits. On the contrary, if uncertainty (maybe another word for volatility) picks up, I think humans can clean up. However, note that the current trend is for more information and more disclosure and less surprise, starting with the FED and ending with companies like WMT that track to the penny each day whether they are on target to meet or beat or miss expectations. Where will the uncertainty come from then as markets find more and more ways to disseminate information freely and timely? Will we all waste away (both physically and emotionally and ethically) waiting for terror attacks?

Finally, I think that the distinction I make is more than just as a person that sees a nail because he has only a hammer at his disposal, but is deeply philosophical and it is not rooted in bias. I wish I could come up with a clever analogy or metaphor to explain more clearly what I mean, but one escapes me at this moment...

nitro

Quote from illiquid:

What else would I be espousing, if not complete faith in the fallibility of mankind?

But I understand you view the markets a certain way which aligns with the tools and manner with which you trade, and I do the same as well -- our schemata of the markets are in the end just extensions of our methods and limitations. For me, I'd put my money on human nature subsuming technological innovation. This generation may have seen its last bubble come and go, and the collapse of volatility may just as well be the inevitable aftermath, program trading or no. But I'm confident that the closer the future markets approach that automated equilibrium you envision, the greater the level of irrationality that will be poised to follow.

Can't you just picture a HAL 9000 of the not-so-distant future commenting on the next super-bubble in the markets? "Dave, we've seen this kind of euphoria many times in the past, and they've always ended in collapse. Always . . . . " :eek:

 

[ratboy88]

Quote from nitro:

I really doubt it for say the next five years. Some already think "pure" daytrading is dead, but I think that is from most that started in the late 90's bubble years.

IMO Decimilization more than anything else is probably responsible for the death of the "pure" daytrader, not the computer automated programs. Bring back 1/4s and I think you would get an influx of traders again. All that does is raise the "toll" investors have to pay to execute though, and I doubt the SEC will go in that direction.

nitro

wow, we actually almost agree on something.... hell, i say trade in 2.5 cent increments, anything would be an improvement. right now during a fast market it is getting hard to execute any type of size. 40 pricing points per dollar would be much better then 100 !!!! the SEC will never do what is best for joe public although they will always give lip service. they do whatever their masters tell them to do and then spin it.