Grey Box Trading on the Rise

[punter]

livermore use to trade off a ticker.

in 99, direct access was enough to have an execution edge.

scalping has always been about executions. without proper executions, risk management means nothing, and that will not change.

i think most traders have been aware that automation is on the rise. But if you're joe scalper, its probably been a rough ride figuring out how to automate your trading. the costs of hiring a programmer are prohibitive for most, and an ever changing environment day to day and month to month make for little flexibility in a black box.

in the past 3 months a few shops i've contacted have been exploring automating parts of their executions, because lets face it, things are getting faster. if you don't see this, then either you don't scalp/have a longer time frame, have a working gimmick/edge, or you're completely new.

grey boxing executions is on the rise, but automating a complete strategy/risk management plan is a different story. and thats where the discretionary side of man meets machine.

i just cannot conceive of how anyone could possibly fail to understand this concept: that things are getting faster, slippage is higher in most manual executions, and that seeking automation to manage executions is on the up and up.

 

[intradaybill]

Anything you do as a retailer cannot match the capabilities of power houses with exchange collocated servers and armies of programmers so it would be sensible to stay away from scalping and learn to live with overnight risk.

or you can try your luck...

 

[FB123]

Quote from intradaybill:

Anything you do as a retailer cannot match the capabilities of power houses with exchange collocated servers and armies of programmers so it would be sensible to stay away from scalping and learn to live with overnight risk.

or you can try your luck...

I scalp successfully all the time. You can easily catch 10-20 tick swings in crude oil all day if you know what you're doing... however the days of market making are over for humans... not that I thought they were ever really worth trying.

Personally I have been thinking about implementing a grey-box strategy at some point... I already have a number of different systems with different entry/exit conditions that I trade based on market conditions... it would be fairly useful to automate those entries/exits and just use my own discretion to decide at which moments to run which system. The only disadvantage is that I couldn't use my feeling for price action as part of the system, which would probably give me a bit less control. Anyways, it would take more time and effort than I have right now to design something like that, but I agree with the OP that things are headed that way for some traders in the future.

 

[adadadog]

Quote from intradaybill:

Anything you do as a retailer cannot match the capabilities of power houses with exchange collocated servers and armies of programmers so it would be sensible to stay away from scalping and learn to live with overnight risk.

or you can try your luck...

Except the part that big house can buy legislation and pass regulations in their favor, there has never being a better time for retail traders to beat the big house.
Technology has leveled the playing field. However, you need to be all: business strategist, system architect, integrator, developer, and finally trader. You are inherently more agile than the big house and more responsive to change.

 

[CyborgAdmin]

Quote from FB123:

I scalp successfully all the time. You can easily catch 10-20 tick swings in crude oil all day if you know what you're doing... however the days of market making are over for humans... not that I thought they were ever really worth trying.

Personally I have been thinking about implementing a grey-box strategy at some point... I already have a number of different systems with different entry/exit conditions that I trade based on market conditions... it would be fairly useful to automate those entries/exits and just use my own discretion to decide at which moments to run which system. The only disadvantage is that I couldn't use my feeling for price action as part of the system, which would probably give me a bit less control. Anyways, it would take more time and effort than I have right now to design something like that, but I agree with the OP that things are headed that way for some traders in the future.

Hey FB123

Just a heads up, I understand that you are weary of using an automated system because you dont want to lose your feeling for price action. We have designed Cyborg to be a gray box application that supports full interaction. You can manually enter your positions at anytime and have your stops and profits fully automated with trailings, replenishing orders, timed exits ect. As well you can exit any quantity and have your exits adjust.

We allow you to make strategies before hand and hotkey them so that as the mkt changes you can decide which strategy to use or quickly switch to another.

 

[FB123]

Quote from CyborgAdmin:

Hey FB123

Just a heads up, I understand that you are weary of using an automated system because you dont want to lose your feeling for price action. We have designed Cyborg to be a gray box application that supports full interaction. You can manually enter your positions at anytime and have your stops and profits fully automated with trailings, replenishing orders, timed exits ect. As well you can exit any quantity and have your exits adjust.

We allow you to make strategies before hand and hotkey them so that as the mkt changes you can decide which strategy to use or quickly switch to another.

Thanks for the heads up - looks reasonably interesting. I am not looking to go gray box right away, but at some point within a few months I may give you guys a ring. Of course I currently use NinjaTrader and I don't believe you support integration with that platform, but I will be doing a lot more investigation when I have the time, and may consider your firm.