General

For those who have either been intrigued by all the talk of bot trading, or those who doubt it, you MUST watch this TED talk video. It's only 15 minutes, but you will be enthralled:

http://www.youtube.com/watch?v=TDaFwnOiKVE

Algorithms are taking over the world

NS definitely worthy of an Embed







Cheers from G64

Hi Nightstalker.

Conrtary to the general public views that investing is buy a part of a company for stocks and growth, the main business of the global stock exchanges and stockbrokers is taking bets on the direction of the indexes relative to share companies underpinned by there fundamentals.

Buy gold on the stock exchange and all you get in exchange for you're hard earnt money is a scrap piece of paper, as there is no actual physical gold to be had, it is immoral if not amoral.

These are words of wisdom spoken by Nightstalker,further stockbroking is like a game of musical chairs, where the stockbroker takes away a chair when the music stops. It's the stockbroker game and a stockbroker never losses.

The inherant flaw of TV radio frequency technology is that devises, such as TV's, mobile phones, GPS's fall outside of reception. Similarly the inherent flaw of live streaming internet computer technology is that investors orders converted as electronic data collide,forcing chip set algorithms to process electronic data incorrectly, producing trading systems malfunctions, Unlike TV radio frequency technology can be fixed by implementing more radio reception towers, live streaming computer technology cannot be fixed unless there is zero latency, in other words no data travel.

Collision of electronic data is where stems the actual cause of all banks, aviation flight centers. national shipping etc computer malfunctions, trading systems malfunctions is not limited to just data collision







media.smh.com.au/business/businessday/nab-hit-by-jenga-glitch-3008575.html



www.smh.com.au/travel/travel-news/hundreds-of-virgin-passengers-stuck-in-sydney-for-night-20100927-15snr.html


money.cnn.com/2012/05/20/technology/nasdaq-facebook-ipo/index.htm


www.smh.com.au/business/error-wipes-qbe-out-20080730-3n7p.html

great stuff - Man V Machine

this was covered in the AFR's Capital magazine, 20 June, too ... young physicists sitting in front of a bank of 42" monitors checking their own (& other's) algorithms in action (I want their screen setup, its awesome!)

it spells the end of day trading ... the Chicago pit bulls are saying they only get in to make $1000 a day when they used to make tens of thousands ... all due to the bots

If trader's want to stay in the game we can't win against these machines, we have to think more strategically ... longer term than a day or a minor trend ... & factor in/make allowances for what the funds want to do ... play our game, not theirs

Mildly interesting 15 minutes of science fiction.

Zero science.

And certainly nothing in it by way of excuses for newbies who lose money on the markets.

I have a friend who works on the trading desk of a big bank. He used to buy and sell all day. Before that, he was on the trading floor of the ASX in Sydney for a different broker.

Now - and I've been in and watched him - all he does is sit in front of a bank of six 24" monitors, scans the news feeds from Reuters and Bloomberg at the start of the day, makes a few phone calls to other traders (including from other firms - yes, it happens), and then decides which algorithm is the one for a particular stock for the day, and runs it. He spends the rest of the day watching those 6 algos running on 6 stocks - just to make sure they don't go "out of bounds" as he calls it. If they do, he hits that "Stop" button.

And that's basically all he does. He stops the algo just before the close, and runs a different algo to try and achieve a particular closing price. At 5pm, with the paperwork done (basically filing the printouts of the day's course of sales) he finishes and he goes to the pub.

The amount of human skill and decision making is restricted to "What stocks?" and "Which algo?". That's it.

And you wonder why I am cynical about the markets, and the value of TA these days? Or FA? They have nothing to do with anything now.

NS it gets worse than just ringing the other brokers - when I worked for the wire services we used to meet the fund managers and brokers for coffee in the morning, discuss what the day was going to be and what was in play, who we were interviewing and what was being said ... then we'd go to work and met again afterwards (and over the weekends at each other's places for BBQs etc)

it really is a tight community with the fundies and the journos (and some directors too) - the general public is being taken for a ride

thats why I'm saying we can't beat the machine - but where we can trade and make $ is by second guessing how the market is going to react to upcoming events (at least, thats what I'm doing)

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The amount of human skill and decision making is restricted to "What stocks?" and "Which algo?". That's it.
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It's always been like that.
The smart people create, the jocks do the clerical work.
It's the nature of the clerical task which has changed.

50 years ago you had to go to your local branch to have your interest credited and stamped on your passbook.
These days you log on to Netbank and look it up.
The nature of commerce has not changed.
Only the speed and technology has.

It's a beat up.

Now, TED.
TED is the New Idea of science.
Entertaining perhaps, but also uninteresting.
If they could tell me what type of algorithm is being used, what branch of mathematics is being employed, is it sampling techniques, signal processing, what numerical techniques etc ... Then I would be interested.

I know a bloke in a senior executive position for a stockbroker who tenured position is to notify the ASX of erroneous trades of significant financial detriment to investors so trading halts can be placed and those bad trades invalidated and reversed all other lesser erroneous trades he covers up.

The stockbroker senior executive crosses that fine line between legitimately adjusting the stockbrokers electronic records and falsifying so that evidence of trading systems malfunctions effecting hundreds if not thousands of customers disappears.

Defrauding customers and covering up trading system,s malfunctions is successful for the reason not one major stockbrokers has proper or adequate screen snap shot facilities attached to our trading watchlists, in the absence of screen printout facilities most rational customer knows an argument for compensation will never be successful unless supported by screen snap shots as evidence, customers take there financial losses and simply walk away.

Where there is money being made in the market there will always be impropriety, even criminal activity. These are not my words but those of Saffa.

Not one share should be bought or sold by investors or traders unless a printer is first plugged into our trading workstatiosn and a screen snapshot programme is downloaded as cheap insurance against anomalous trading to our detriment.

http://www.asic.gov.au/asic/asic.nsf/byheadline/Markets+Disciplinary+Panel+-+infringement+notices?openDocument


Take care

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Eddie can beat the bots. . .

Hell Eddie beat 99% of the Top Hedge Fund managers in the last two quarters.

well done! Has Eddie seen the BBC series "Million Dollar Traders"?

I posted it in the 'newbies' forum a few days ago - worth a look to see which trading styles work, and what doesn't work

A few of the newbies with less than one month experience beat the fund manager that gave them the $1mil

hey M2000,

Yes i did watch it but a long time ago, Eddie believes it was posted many months ago, it was also on ABC earlier this year. . .

good watch. . .

New Year, New theories and a very different world. . . Godspeed fellow topstockers.

Eddie have you seen a movie called "limitless" ?

I am "limitless". . .

Year ago to corner the market a trader would set up multiple accounts, propping the market depth buy or sell side,and buy and sell to himself, like multi nicks on an investment forum to ramp, the practice of removing buy or sell orders to manipulate the share price.

Market manipulation was legitimized by a change of ASX rules allowing traders to Buy & Sell there own shares,this benefits stockbrokers collecting trade commission fees.

Similarly, large volume Buy & Sell limit orders that created huge changes to share price and percentage change were allowed .For the purpose of an orderly market the ASX introduced without proper or adequate notice price step rules, a lot of investors got caught out, fortunately I was not one of them.

The ASX and associated stock brokers have always been unregulated or rather self regulated, having a conflict of interest the ASX regulatory powers last year finally was transferred to ASIC and in late 2011 ASIC's Market Integrity Panel was formed

matross so you saying that it is becoming harder and harder for the little guys to win when trading.

or that we should just stop investing in the market because it has become so corrupt?

I bought CCC shares @0.88 cents 2 days ago, and am looking to take a profit and exist, got a Sell market order in @ 0.12

you mean 0.088. . .

Yes I would take the money and run.

Eddie been playing continental for a long time.

I am "limitless". . .
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lol...sounds like youve been taking NZT

Well Lep that was my avatar but other topstock memebers thought i was promoting illicit drugs so I changed my avatar to some friendly Grenache for Kids.

'Wash trading' is the correct terminology?? i believe matross.

CFTC has not long ago(April) charged the Royal Bank of Canada with wash trading.

Add on: More so for the big end of town - still relative.


Traders Under U.S. Investigation For 'Wash Trading'.....

Permit me to issue and control the money of a nation, and I care not who makes its laws. . .

Eddie "No Limits" Mora

Mayer Rothschild or Eddie "No Limits" Mora ??



The Science of Mathematics is to the Art of Business as Existence is to the Artist!

limits!

Mr. Rothschild ofcourse. . . Eddie can only wish.

Algorithmic trading, quant trading, call it what you like, is as old as the trees.
And it's always been High Frequency, at least as high frequency as the the technology of the day permits.

But HFT does not guarantee that it's practitioners make money. It has nothing to do with the serious business of investment. LTCM had an army of physics/maths PHD's and economics Nobel Laureates. They had supercomputers and huge budgets. They still went bust.

What this boils down to is that HFT has become a crutch for newbies who lose money because they are completely out of their depth. They should not be in the markets.

And the claim that HFT has rendered TA useless is ridiculous. TA has always been useless.

"And the claim that HFT has rendered TA useless is ridiculous. TA has always been useless"

One for the TopStocks Classic thread!

And while we are at it, Eddie, let me just add that anyone who thinks that their long term success in the market is in any way affected by the legislative program of the duly elected Federal Government of Australia, should also not be in the markets.

But Thug, Gillard told me to buy ESI shares...

It's better for the environment she said.

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But Thug, Gillard told me to buy ESI shares...
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How many times have I told you to not listen to newbies, Eddie?

Yes Mr. Thug. . .

Eddie will not listen to Newbies...
Eddie will not listen to Newbies...
Eddie will not listen to Newbies...
Eddie will not listen to Newbies...
Eddie will not listen to Newbies...
Eddie will not listen to Newbies...
Eddie will not listen to Newbies...
Eddie will not listen to Newbies...
Eddie will not listen to Newbies...
Eddie will not listen to Newbies...
Eddie will not listen to Newbies...
Eddie will not listen to Newbies...

Instead take expert advice. . . NEN & TAP doing well chaps I hope you jumped when Eddie said Jump. . . Eddie's next must read will be a detailed analysis of NEN

"And the claim that HFT has rendered TA useless is ridiculous. TA has always been useless"

HFT is based on TA ... its changes in the technicals that trigger the Buy/Sell ... not changes in fundamentals

Thats the problem with trying to be a smartass ... you end up looking ridiculous yourself!

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HFT is based on TA ... its changes in the technicals that trigger the Buy/Sell ... not changes in fundamentals
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For your information, newbie, the 'technicals' are nothing more than a collection of buy/sells

I despair at the financial ignorance of the masses

What happened to good old hand written notes and individual research?

with google at our disposal these days it doesnt take long to see who the board are, what they company does, their PE ratio, 5 year profit, cashflow etc. . .

I totally agree that things are becoming more and more corrupt, but their are opp's out there, just gotta have some balls and grab them "when" you think the time is right. . .

Example, i will speak on behalf of the word and thug (but please correct me if i am wrong). . .

The Word should not be buying any stocks this yaer becuase he believes that the market will crash and that fiat currency will become wallpaper. . . he may invest in gold companies however.

The Thug - will do the opposite, he will see opportunities in a bear market and purchase stocks will sound fundamentals and stocks which are undervalued relative to their earnings ratio.

TA is just that. . . parameters that are input to create a figure which the buy/seller wants to believe, but do not think for one second that his gut instinct will take not precedent in the sell/buy order or that additional news will not change the mind of a trader

Exactly Marcus, HFT is based on Momentum Analysis (Is this not TA (Fuzzy Theory if you like)Strategies vary, but they include market microstructure, volatility forecasting, liquidity modelling blah blah blah

How can one apply FA to a micro second trade/Trades

A read of Edgar Perez - The Speed Traders may be in order?

Eddie,

The golden rule in this game is this:

If someone comes to you with an idea, you are dealing with a PRODUCT.

If you come up with the idea yourself, there is at least some chance that you are dealing with an INVESTMENT

And what exactly is the relationship between finance/investment and the spectrum of Helium?