What do you think of this entry by Eckhardt?

Discussion in 'Trading' started by Kovacs, Jul 23, 2006.

  1. Kovacs


  2. Daal


    Whats the date of this?
  3. NTB


    Smart comments. Keep evolving. Think outside of the box.
  4. Kovacs


    I can't find it. The closest thing I could find was a comment posted in 2005:


    Sat, 1 Oct 2005


    Hi Don Eduardo:

    Ed says on September 26:
    Complex is sometimes just an attempt to hide.

    This comment of yours caught my attention.

    Although I respect and admire Dr. William Eckhardt for his knowledge in the scientific field, I feel he tries to make simple things as complicated as possible with comments like:

    “There is no doubt the game has become much more difficult” – The New Market Wizards . Meaning that mechanical trading systems do not work as well as in the past."

    Another one:

    "...Eventually artificial intelligence devices, superior to any human researcher, will effectively uncover all exploitable nonlinear relationships of price to price. Such relationships will be mined until technical analysis is no longer profitable. There is an irony in that dogmatic" random walk" theorists, dead wrong for a century, will turn out to have been prescient--futures markets will have been driven to randomness. The process has already begun.

    I feel these developments are nearly assured (assuming no disruption of civilization). What is less clear is whether this will happen as rapidly as I predict -- in 10 to 20 years. In the meantime, profitable trading will only get harder as increasingly more astute traders pursue Progressively weaker statistical regularities. This is why it is necessary for a CTA continually to improve just to hold his or her own. The only consolation I can offer is that there are profits to be made participating in this process of randomization ..."


    Perhaps he is unconsciously becoming a future futures trader instead of a present futures trader .

  5. Kovacs


    From what I gather, this is less about evolution than handing over the baton to machines as the markets become incomprehensible to humans.
  6. Totally disagree.

    Machines are not thinking and are in the end programmed by humans. Reaction times may have an influence on the extreem short timeframes but the longer timeframes are still being under the influence of human perception.

    What his remakrs means to me is that Eckhart no longer has (or has difficulty finding) an edge in the markets.

    psycho analitics
  7. NTB


    And the machines don't throw off 'edge' now? Where is the new 'edge'? What is the new game? Have the hedge funds become the 'dumb' money? All the types of questions one needs to be asking.
  8. Kovacs


    He seems to be doing fine.

    As for machines being confined by their programming:
  9. Daal


    Well, what if the market becames infested by this 'super researcher' computer, assuming everybody is using it as it will be probably the case(it might take a while after its creation) they will trade against each other and break even in the long run. Factoring commissions, fees, taxes and inflation it will be impossible to have any positive return, the more likely possibility is that everybody will be net loser on average in the end of the year and 10k hookers and monaco trips will be over for us. We're all going back to flipping burgers and watching seindfeld reruns
    See you all in the soup line
  10. The mistake here is that the "nonlinear relationships" can't cancel each other out.

    In one market, no matter how "smart" a supercomputer is, it can't take both sides of a trade.
    #10     Jul 23, 2006