The FT Is a dumb media and should be burned. The title is very bold compared to the actual content and result of the study
Human traders can beat algorithms by relying on gut feeling, study shows" That's true, but that's a relatively small ...tiny... elite club to join. Most human traders should be considered somewhat lucky/good...Just to break even in the long run -- never mind being able to generate a handsome profit But for those rare, few, successful discretionary traders out there...you're certainly able to outperform the returns of machines. Machines are kind of more or less just scalpers; while a talented discretionary trader can do real damage in the market.
But the topic is interesting. As more and more volume is done by HTFs. One can ask what's their strengths / weaknesses and compare it with human's ones. However it stays purely recreational until someone find a way to exploit these asymmetries. I am not the one who's going to operate simply by guy feel because some studies affirm that it's an edge. Lol. Many games are beaten by computational algorithms. Well ... better avoid plays that are dominated by them ... Markets are made of different games.
There are more successful traders that believe the edge has now shifted to favor them over the HFT's/algo's. The reason for this is rather simple, when so many market participants are using automated trading they lose alpha. HFT's, algo's and dark pools leave foot prints, a skilled discretionary trader can find these prints and beat these static machines. I am not talking about the bid-ask spread- the HFTs have that on lock down.
LOL, the 18 were HFT traders, scalpers. If you long time scalper, you making money. You taking so many trades during a day, you don't even realize you got in front of HFT signal and not till price is screaming and you took small profit that you did it. I take the computer over one person any day cause computer can trade dozens of systems. What is scary, hedge funds be the last place I put in any money and so many pensions use them. http://www.businessinsider.com/dan-loeb-first-quarter-investor-letter-april-26-2016-4
Humans and Algo's both create predictable patterns, which we can exploit. The issue is humans can and will create the same pattern over and over again, where as an Algo can change so much that a pattern which was working for you is no murdering you. HFT trades within the spread and although taking money out making the game over all harder as less to go around, shouldnt effect price movement at all.
That's because the fastest computers can only process 0.0004% of contextual information compared to the human brain, although given some of the posts on the forums these days you could argue that's the wrong way around. Who the hell commissions these studies anyway, there's way to much money floating around, you just have to look at LTCM and you have your answer. There's seriously more charitable things to do with this money than produce endless amounts of the same thing regurgitated.
that is why woman traders are better. they have a better risk assessment characteristics and don't blow up. you can claim a fat finger typo but just maybe not.
Indeed... fat finger typo. But that's true ... it's said that guys and woman have their own set of strengths and weaknesses too.