The future of automated trading: round two - page 14
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What will the robot do if 51% of traders open a long position and the remaining 49% go short? They have read enough horror stories of timbo and them and make us (people who do not believe in such horror stories) to believe it. Godspeed, gentlemen.
First of all, we are talking about perspective, secondly, do you have any idea of the mechanism of what you have described? Apparently not. Behind the robot is a ts, with human logic. Robots simply do all the work of a person better, faster and more efficiently, limited only by the quality of hardware and level of software.
Three treasure hunters at the same time got the map with the location of the treasure, one went to the compass on foot, another on a bike, the third in a helicopter with a GPS navigator . The question, who will get the treasure?
There is no 100% analogy and it does not work either, the market is different but roughly as follows
I hope you opened a position following some system that you have reason to believe is profitable. Now, robots do not threaten traders, but profitable systems. Due to their higher speed and greater awareness, robots can trade your own, or a related system, faster than you do. Accordingly, it will no longer be profitable for you.
And no one forbids opening long positions, as well as short ones. Just like feeding coins to slot machines. And some people even win on the machines. The question is only in probability and mathematical expectation.
It is assumed that
1) Robots trading my profitable system and outpacing me by a few pips reduce the profitability of my system to these few pips, so it is no longer profitable for me, but not for the robots?
2) The robots will decipher all the profitable systems that people trade?
Everything will end when currencies have a fixed rate on the market :) and there will be both supply and demand, and small traders will have no interest, only real sellers of goods will work ;) But this is "utopia" :)
...who gets the treasure?
to the one who first held the original map in his hands, not for nothing he also sold those three ;)
I know what I'm writing about.
The assumption is that
1) robots trading my profitable system and overtaking me by a few pips will reduce the profitability of my system to those few pips, so that it is no longer profitable for me, but not for the robots?
2) robots will decipher all the profitable systems that people trade?
1. That too. Already today arbitrage is impossible for individual investors. Not because it doesn't exist, but because all emerging arbitrage opportunities are being eaten up by big companies. Manual scalping is also disappearing from the scene as the robots of the big companies are faster and more accurate. For individual investors, trading is always more expensive than for large companies, i.e. their robots. Robots do not shy away from one cent returns, and for an individual it is not enough to cover the commission.
2. Is it impossible? How many of them are really profitable strategies? And Google knows them all!
Another important point is that the market behavior changes due to robot activity, and this is not a fantasy, but a fixed fact for many markets. I.e., all those strategies that were profitable yesterday will not be.
Everything will end when currencies have a fixed rate on the market :) and there will be both supply and demand, and small traders will have no interest, only real sellers of goods will work ;) But this is "utopia" :)
We are not talking about currencies, but more broadly. Robots increase market efficiency. Efficiency does not mean fixed rates or no speculators, but no systematic opportunity to make money through speculation. I.e. rates and prices will fluctuate, speculators will still exist, someone will constantly earn, but each time it will be someone else, systematic earning with a mathematical expectation greater than zero will not be possible.
Systematic profits - This is debatable (in my opinion).
I'm sure there will be profitable strategies with positive MO's both now and in the future. Just in the future the trading overheads will increase, which may significantly reduce the profitability and efficiency of trading systems.
I suppose one possible solution to this situation would be to increase the number of exchanges and large banks involved in trading (at least in Russia).
For private investors, the best result would be to have a certain number of intermediaries (something like modern DCs, but different in essence) between traders and the big players (exchanges and banks).
The conversation is not about currencies, it's broader than that. Robots increase market efficiency. Efficiency doesn't mean fixed rates or no speculators, but no systematic opportunity to make money with speculative trades. I.e. rates and prices will fluctuate, speculators will still exist, someone will constantly earn, but each time it will be someone else, systematic earnings with a mathematical expectation greater than zero will not be possible.
Mate, are you just winding the public up or are you really manic? :)
Yes, systems based on arbitrage will die out, there is no need to compete with monsters in chasing cents too. But who said that this is the whole list of TS. We should not forget that rates of instruments only reflect the real economy. And it develops according to its own laws. And the increased efficiency of the financial market will only allow them to be better detected. Therefore, regularities and short/medium/long term peculiarities will appear, which can and should be used in trading. And here, "mass" will no longer crush it. The capacity of an individual with his MS is quite sufficient.