Can algorithmic trading systems beat human traders?

Is there something special about human "intuition" that machines can't replicate?

 

In theory, no. In practice, yes....youve just opened a massive can of worms...

 

Yes, I think probably they cant guess when a buy is just from weak hands or from big hands. In both cases they would do the same as a counterparty. And the future conception of a corp. In example, real accumulation process looking for long term. Anyway I would say thy just care about volume.

 

Machines are stupid from the standpoint of market economics.
If you asked the algos 2 years what would be the direction of the copper market, they would have said "up"....when in fact the exact opposite occurred.
Bottomline: Algos best for very short-term technical trading....where supply and demand do not come into effect in a large way.

 

I give that a big resounding Yes.
The markets are part art, part science. On any given day it can vary widely on that spectrum...and good traders know when -- more or less.

Sometimes, because of positive economic reports (this is the science part) ...the market can go straight up -- and likewise go down in vice versa...these kind of days are a trader's dream. it's easy.
And other days, the markets can be moved by rumors of other news or no news at all. (the art part)

You kind of develop a 6'th sense intution...from trading/following one market only. -- it's sometimes hard to explain.
(trade options for greater growth, not the underlying stock. -- but this is for another thread.)

 

A computer can beat a human at chess, but can a good chess player beat a good trader in the market?

 

If given the same information as the human, there is no reason the algo couldn't come up the same or better conclusion a human does. This is where practicality comes into play...its hard to program the machine, and its hard to supply it with enough data...but it could be done

 

Dunno. I look at the world class poker matches and I am just astounded at the intuition exhibited by the best players.
I don't see how that can be "programmed".....

 

Personally, I don't believe in "intuition". BIG poker winnings are most often a matter of short-term fortune (luck). That's not to infer that smart, experienced players don't prevail over the lesser... but you have to be lucky as well as experienced to grab the brass ring.

 

Both Chess and Poker are kind of horrible analogies to use to compare to the market. Chess is purely analytical and systematic. Poker and all card games too is based on the assumption that everything is random...assuming it's a relatively large multi-deck shoot.
You should watch these two documentaries on the stock market