Q http://www.iddmagazine.com/idd/fierce_finance.cfm?id=10741&issueDate=current Algo Wars Josh Friedlander (josh.friedlander@sourcemedia.com) October 24, 2005 With algorithmic trading still in its infancy, many myths will no doubt be shattered over time as Wall Street and its rivals look to differentiate themselves. The ultimate beneficiaries of this competitive maelstrom will likely include buy-side firms, for whom the competition among different practitioners can only yield profit. Perhaps-with the right execution-even small-cap stocks will reap rewards from the algorithm's rapid advance down Wall Street. UQ
Hi, Thanks for posting. Can you elaborate as to how one of the bigger forex players - like Soros - could find an independent speculator trading big volume and eat them alive? Second question. After a trader has developed a profitable, mechanical strategy, how can the addition of neural nets, genetic algorithms and other assorted computing complexities - which I know nothing about - contribute to greater profitability? On the surface, they look more like the next generation of curve fitting tools marketed as a technological panacea for traders. I may be completely wrong though. I am open to anything. As an aside, I don't doubt neural nets and other advanced predictive software can detect and anticipate tradable inefficiencies in the market. I am just unsure how they can offer a definitively superior alternative to an already successful trader who has identified one or more tradable inefficiencies the old fashioned way. What am I missing? My limited observations to trading the market are logically based on what skills I bring to the table. I am not a programmer nor have any background in stats or quant analysis. Naturally, I gravitate towards understanding the market by the nature, disposition and make up of those participants which constitute it - the people. Fear and greed. I've read a large portion of total daily forex transactional value is speculative. Assuming thats true, fear, greed and the statistical 'outliers' should play a pivotal role in steering prices towards that natural outcome. To me, that goes a long way in explaining and 'making sense' of the forex market. But thatâs all psychology right there. Im wondering how neural nets and advanced predictive software could add to market insights gleaned from mass psychology. Are they just offering a different approach to the same problem? ie 1000 ways to skin a cat? Or do they uncover another realm of market operation indetectable by human intuition? Van Tharpe in his intro to money management (trade your way to financial freedom) noted the utility in using predictive technologies not to devise a system itself, but rather to supplement and refine an existing profitable system â mainly to better define subcomponents of the whole like position sizing or entries for example. Is predictive software best used in this way? Or is there something better? Sorry for the length and the barrage of questions. I rambled a bit there. I'd appreciate any comments or insight you might offer. Thanks for taking the time.
It is always a sign of immaturity when someone starts into a personality attack and innitiates a dick measuring context. The market is a great equalizer and it does not matter if you have a PhD or 100M $ under management in your hedgefunds or what. It can all change in your next trade but it has been my experience that people like yourself, who do not exhibit any humility towards the market or show any respect for someone else's opinion, do not last. I know vital-analitix and I know his skills and what he is capable off. He gave you a warning to be carefull and you ignore it at your own cost. The laugh is not on you, you are an embarasment your people and your company. The simple fact that you are working for / having a fund means to me that you are a person who has no balls (or ability) to trade his own account. Don't bother to reply, you are another one that goes on the ignore button.
"Time to profitability" http://www.elitetrader.com/vb/showthread.php?s=&threadid=57047&highlight=time+profitability Take your time, and good luck. Off from this thread now.
I actually welcome this kind of stuff... "Don't bother to reply"... Please... Where's the Dick measurement contest coming from... Other than whomever Vital is trying to tell me that I was using a blackbox approach that will bite me in the ass one day... I can't help but to laugh at that if you like to ASSUME what somebody is doing before you know... How about the statement Vital made that said he hopes for the day my systems fail... You wouldn't call that flaming instead of advice?...And the only embarassment that is being displayed is the one you're offering yourself... Perhaps you should know more about the person whom you're speaking with before you become indecisive about their knowledge... Why wouldn't you believe that I respect the markets... Perhaps I should mention the best thing you could do is stand aside when things don't seemingly work well and rethink your strategy...I've also already explained I'm not interested in using high amounts of leverage to capitalize on what I'm using...I think perhaps the immaturity is actually the one you're displaying when you say Dick measurement contest and Balls in the same sentences you write on a public forum... Funny how you KNOW what Vital is capable of and you have no idea what I am capable of... And most all know what ASSUME stands for so stop doing it to yourself... In addition... "The simple fact that you are working for / having a fund means to me that you are a person who has no balls (or ability) to trade his own account." It's funny that's what it means to you because people I admire like Eddie Lampert and George Soros would completely disagree with you... Perhaps you should rethink what you're saying because it also means that people trust you with there money because you're a success at what you're doing...What did you think I came here to do... Advertise... No... I could care less... Do you see me saying come put your money with my clearing firm and make sure you tell them Vizion sent you... I'm stopping now because really you're the joke to me...
And you Oddtrader I couldn't figure out what you were trying to say all this time about the articles you keep pointing to... Everyone of them states the fact that there are great successes as to what I told you to go look up. It's very natural in Literature for articles to share two sides of a view, but go to Citeseer if you want to show me something that will make me doubt my logic. Because I'm obviously not going to display it all within a few posts...You might also note that all the articles you pointed to, unless I missed one in particular, talk more of the successes and not failures... And as far as my statement about saying I'm still into sort of seeing wat happens is only because I use "hourly" strategies that constantly keep me in the markets... So I'm always buying and selling...Never one or the other...So yes I do sort of see what happens on my trading accounts, but all the optimization parameters like money management and exit strategies are completely controlled by COLD LOGIC... The reason why I pointed note at MATH algorithms and A.I. in the first place... Which reminds me to say I don't use the things I use to predict markets I use them to control things as there happening. Also to comment on the thread about how long it took people how to trade... Perhaps they should have gotten there MBA in FINANCIAL ENGINEERING first before they came to it... But to agree with people that say you don't need degrees for this stuff I'd have to agree totally. It only requires time for most people...Most people can never get over the fact that they watch their money go up and down...Fortunately for me while I was getting my MBA I questioned nearly every department about the things I use now to trade with... So I spent time in the Physics, Finance, Computer Science, MATH, and Science Depts... Before I learned what it took me to become a Trader... And it helped quite a bit to have just sold my internet traffic to Yahoo before I graduated... So I had money to go experimenting with... And more precisely perhaps you should take your time since you're a newby at it and good luck ;-)
What I meant was that after you capatalized on a great deal of money you couldn't just assume that what you did to get there would keep working. If you were using a great deal of leverage on alot of money and thought you were going to get 600% returns or more a year forget about it... You can use those tools applied to a good trading system to make it better by optimizing it. position sizing, money management etc.. Also Neural Nets are how your brain works to make decisions so you can apply them to your systems as well, but you'll have to go know the underlying math behind them to know how to program it well. Actually there is alot to your questions. If you'd like ...PM me, because all that I could try to explain to you in text that is setting on a page still wouldn't answer your questions. I've got Forex to trade at the moment.
Thanks for getting back to me. And i will pm you. I don't understand why the above scenerio holds true. If its lack of leverage at the wholesale/interbank level that restricts big volume profits, a few forex bank reps for HNW individuals claim leverage is always negotiable depending on the clients needs. But big leverage, certainly 'retail size' leverage is still available. Its all negotiable depending on the clients needs, experience and percieved risk. Thats what ive been told anyway.