The key point for retail traders is that bigger hedge funds and institutions are feeling the threat from the retail side. It used to be the case that institutions having all the advantage over the retail clients. At the current point in time, retail clients do stand a chance because they can do similar things as the institutions do if they understand what algorithmic trading is all about. My guess is that many firm traders who go independent will bring the knowledge of such into the hand of retail traders soon.
I'm having an interview next week for a position in the area of algorithmic trading. Does anyone have some more pointers?
I find this post highly suspect. Algorithmic trading strategies as practiced on the highest level... Are developed and coded by Masters/Doctorate level software engineers making > 100K. The "end product black box" is ULTRA HIGH MAINTENANCE... Constantly tweaked and EVOLVING over time to "stay ahead of the curve". It must be run on a highly optimized custom platform... since latencies on the order of 50 ms can make a significant difference. But, of course, all these smart guys are just wasting their time... Because any Retail Dude can buy a $100 program that does "similar things" from Mr.Chan or someone like him. rm+
I posted my copy of the Tabb Group's 2005 report on Institutional Equity Trading. Depends on what kind of position you will be interviewing for, if it is junior level, then the information should provide a decent background. However, if you are nterviewing to be a strategist, then probably something like "Journal of Computational Finance", etc, will give you a more depth in current state of research. http://www.elitetrader.com/vb/showthread.php?s=&postid=908185&highlight=vwap#post908520
I guess I qualify, since I was on the institutional trading side before going off on my own. But I don't consider myself a "retail trader" (since I am a registered broker / dealer, just one that does no customer business, all proprietary, that's all). And other than a few people here on ET and else where, I found most of the retail (or retail prop) trader to only have peripheral understanding of algorithmic or automated trading as an industry. In fact, after analysing the counter parties of my execution reports, I found that over 2/3 of my trades are with traditional ibanks (and their automated trading clients), rather than "retail" oriented entities, I take this as I am still primarily trading with institutions and funds. A friend of mine who runs an arb proprietary desk for an ibank did a similiar analysis a few months back, and found similar counter-party patterns, which I take it as further reenforcement to the idea that most ex-institutional traders still trade in the "institutional" way, which is with other institutions. Believe me, we like retail flows, a lot, just that they don't account for a big chunk of our trading counter parties.
Will computers replace humans on the trading floor? Of course they will. We once believed the earth was flat, some people from from the deep south still do. Humans program these computers, agreed, but get a few level headed geniuses together and they will create something that doesn't carry emotional baggage. Where does that leave you? That's a question only you can answer. For the time being and for the forseeable future humans are a commodity that computers can not do without.
thinking that 'automation' takes out humans is like comparing "real trading" in 1920's in opposition to that newfangled "telephone trading".
Some things to ponder though, in terms of algorithmic trading. Take away the human factor, would the markets stagnate? For the private investor/trader computerisation could lead to an easier life on the markets, in the short term? Are computers too logical? Are they easier to understand than the individual human? What would computers reduce the logic of the markets to? Money? Will the legacy of human error ever be ironed out of the market without destroying the market? A 'bull' computer and a 'bear' computer? I don't think so, computers are too logical.