Human interpretive reading of news, tape & sometimes price charts and acting on same, with prop-shop policy disdain for automated mathematical trading & money management that can analyze thousands of issues in a fraction of a second, issuing instant risk adjusted buy/sell/hold signals as opposed to the common human seat-of-the-pants attempt to analyze just a handful of issues at any one time. Quant trading is just a matter of maximizing resources within a statistical framework of productivity and risk aversion whose objective is maximum return on capital, with no bias toward transaction, i.e., commission & fee, generation.
This is a great post!!!!! But for exactly the opposite reason to what its author is trying to communicate. Read the analogy again ( the reason I quoted the whole thing). The logic that is driving the response of the monkeys is exactly what causes so many negative posts on these boards about prop shops. For every one clever and aggressive 'monkey' who takes the initiative to climb the stairs and is rewarded, there are four others sitting on the sidelines getting sprayed by cold water (or just missing out on the reward). The behavior of those four monkeys (attacking the successful one) becomes status quo and eventually poisons everyone. This persists even after the offending condition has ceased and the original four are removed. This my friends is the reason why it is so hard to get valid information about a subject such as prop trading. Because monkeys who don't even know why, and have no valid reason for, are talking shit because it is what the saw another monkey do. Monkey see monkey do. In the end it is the one who is brave enough to challenge the threat of attack from the other monkeys around him who ends up with the prize! As for having to be a genius to succeed in the markets or elsewhere, well it never hurts to be sharp. But it is more often the case that the 'smartest people' in the world can't make a dime outside the ivory walls of academia. There are a lot of people in the markets and the business world in general who are by no stretch of the imagination 'geniuses' with ivy league pedigrees, who have made many multiples of what the 'geniuses' have. Genius creates a false sense of security that very often in the markets is the Achilles heal that brings down the house in the end. Look no further than LTCM. The moral of the story my friends: Be careful of the monkeys who's threat of attack prevents you from being successful, (especially the ones with ivy league degrees and perceived 'high IQs' ). Cheers
Automate: That was a perfect post. If there was a "Best of" on this site, that post would surely be at the top of the list.
Thanks for the detailed explanations. You could have just said blackbox trading So what about us ground dwelling non ivy leaguers how do we get a piece of this action?
well this lowly bottom feeder can beat the quants on single issues every day. but alas, they can interpret data on thousands of issues thus allowing for quick profits which in turn hurt us all. the quants greatest advantage came from one cent increments. the "sec" gave the nyse a choice between pennies and nickles and the nyse and its criminal organization chose pennies. (i.e. Goldman and company) what was funny about it was they marketed this scheme as "for the little" guy. then the big banks like GS went full bore with their quant programs. now the institutions pay brokers like goldie big bucks to break up their orders to get around the problem of fragmentation of size. so in essence, they create a problem then charge for the solution. nice racket if you can get it. meanwhile 3 banks control an absurd share of daily volume on the big board and nasdaq. i am curious as to transaction cost. mine are quite low but it wouldnt surprise me if the big banks have found a loop hole to avoid paying sec fees.....i dont doubt for a second they have exempted themselves from exchange fees. if they are exempt from sec fees, this is corruption at its best. one only has to look at how the sec has brazenly ignored the illegal naked shorting fiasco to realize that they are a puppet of the banks/bd's. and lets not forget the dropping of the ball regarding where the short interest preceding 9/11 led to. corporatism is fast mirroring fascism and the trend is not pretty. in summation, the arrogance of the quants will subside as they become "commoditized" and outsourced and once again the little guy will not be so disadvantaged.
You speak the truth! In my opinion, one of the keys to trading is being smart enough to know that you're really not that smart when it comes to the market. With pure quant trading, it may be beneficial to be a genius. With discretionary trading, it's probably better to be a notch below that!