HAL 9000-Style Machines, Kubrick's Fantasy, Outwit Traders By Jason Kelly http://www.bloomberg.com/apps/news?pid=20601109&sid=amK25dKbMrhQ&refer=home HAL 9000-Style Machines, Kubrick's Fantasy, Outwit Traders By Jason Kelly May 3 (Bloomberg) -- Way up in a New York skyscraper, inside the headquarters of Lehman Brothers Holdings Inc., Michael Kearns is trying to teach a computer to do something other machines can't: think like a Wall Street trader.... USE LINK
.......2001 to '05: The quants posted a median annualized return of 5.6 percent,............ Poor Quants. All that work for nothing. Get a job.
i think its a sketchy article in that there is no real new news within it. a lot of those quotes are old news. the fact that lehman is doing what they are doing confirms that they and most of the similar firms are pursuing trading along those lines. its part of an on going transition to more sensitive proactive trading by systems. whether they make a monumental leap to a higher 'level' unbeatable system i dont know. i dont think there will ever be an unbeatable system but i do see the withdrawal of human traders to a level unseen in recent years. the guy at renaissance technologies who made billions last year summed it up. ' i dont hire brokers,traders or anyone with trading experience. i want quants quants and more quants.people who can crunch numbers.'
beaker, I agree with you, just wanted your vagaries to become a bit more articulated. That article was just depressing and I stopped reading it...it came across as a desperate attempt to get another edge that isn't really feasible. Arbitrage opportunities excluded, the AI tech has sadly gone from something that would better life to something that might make more money faster and hearing those quants talk about their duties you get the feeling they're possibly only happy doing what they're doing because they have some freedom and probably get paid oodles. I found this paragraph especially disenchanting regarding the future of AI: "At Columbia, McKeown leads a team of researchers trying to make sense of all the words on the Internet. When she arrived at the university 25 years ago, NLP was still in its infancy. Now, the Internet has revolutionized the field, she says. Just about anyone with a computer can access news reports, blogs and chat rooms in languages from all over the world." It's like painting a picture of roses being thrown to liberators and ending up with a civil war and more....painting a picture of AI that can mimic and capitalize off of human thought algorithms and instead you have a smart dictionary. That article was a huge waste of my time and I seem to remember reading an almost verbatim article in the last 6 months...maybe in Wired?
SiSePuede! i think what is quite interesting is there are people working on forumlae that involves how the human brain signals a foreign body has entered the body and how the immune system responds. by analysing the movement and data certain patterns are determined that are common traits in nature at work. these patterns have very similar trading characteristics which do show up in the markets. these ' bio-trading' studies along with water flow dynamcis etc etc are being developed as we speak. i read about these almost a year ago and i believe the water flow dynamics was already in use. i have changed my trading dramatically in the last recent months so that i no longer play the nick a tick game. i have a position, a profit level and stop loss level. i found that by trading this way i avoided the problems of encountering superior trading algos and the like of which i cannot compete against. i really liked trading minute to minute and being in the thick of it but the reality is this now a mugs game.
Traders looking to be employed should worry, but an independent trader should have plenty of opportunities as long as price moves. Could price practically flat-line as a result of puters fighting over the price going off center?
Could be... might eventually evolve into "fastest computer captures a tick". Volatility is waaaayyy down, historically already.