Is fully automated trading a fantasy? Your opinions here

[youngtrader]

What happens when everyone has the same amount of technology and every system is the trained to capture all moves in a market. Then you have computers going against computers and none of them will take the other side of the trade because they are all smarter than that. What kind of a market would that be. I just don't see how automated trading can be better than a manuel trader who can change and adapt to everyday market fluctuations.

 

[traderdragon2]

I trade NAZ, nyse, and all my stuff is 100% custom coded from scratch.

 

[Dustin]

Quote from youngtrader:

Then you have computers going against computers and none of them will take the other side of the trade because they are all smarter than that. What kind of a market would that be.

It's understandable that you could think this if you haven't been trading long, but what you will come to learn is that there are a million ways to make money in the markets. There will always be someone willing to take the other side of a trade in a liquid market.

What one system may see as a shorting opportunity, another system may be scaling into a larger long position as the stock goes down. There are 999,998 more examples but it would take too long.

 

[rosy2]

my firm does automated trading and quoting. our traders set parameters or make sure everything is working.

 

[Neet]

I have fully automated system that runs off the tape drive of a Vic 20.

It prints money on the dot matrix printer, unfortunately the money is no good.

 

[traderdragon2]

And now for a short break.

Wall Street pic

 

[syswizard]

Quote from rosy2:

my firm does automated trading and quoting. our traders set parameters or make sure everything is working.

What happens when the markets "change" and the system is "no longer working" ?
(Hint: parameters = curve fitting to history)

 

[sigsegvboogman]

Fully automated systems do exist. I have been in the game since around early 2000. Returns over the years have ranged around 100% monthly to other more scalable systems that currently do 20% monthly on average and even the more scalable systems do have their limitations. I must say that since I ended up in this realm, I could never look at the markets the same again. Every portion of the system from front end to back end to Order Management, viewing and so on is 100 percent custom designed by in house programmers and has to be in my opinion.

 

[virgin]

Quote from sigsegvboogman:

Fully automated systems do exist. I have been in the game since around early 2000. Returns over the years have ranged around 100% monthly to other more scalable systems that currently do 20% monthly on average and even the more scalable systems do have their limitations. I must say that since I ended up in this realm, I could never look at the markets the same again. Every portion of the system from front end to back end to Order Management, viewing and so on is 100 percent custom designed by in house programmers and has to be in my opinion.

On what max size can you do 100 % and on what max size 20 % monthly ?
What is the average trade duration of those systems ?

 

[Trader KGB]

Quote from sigsegvboogman:

I have been in the game since around early 2000. Returns over the years have ranged around 100% monthly to other more scalable systems that currently do 20% monthly on average

Let's take the low end of that range, scalable 20% monthly and 4 years. Starting with $100k that's $630M gross compounded monthly. The world's smartest quants working for the world's biggest hedge funds can't even come close to the figures you're quoting. Something is exponentially off or you'll soon be the first trillionaire..