Human versus AI; can we still compete?

[ModE98]

Safe.... I like your thinking.

[uncle23]

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i'm thinking like you Safe..........maybe its it would be nice to write a low frequency algorithm to neutralize the high frequency algorithm.......?

[ModE98]

Hey uncle, whatever works. It is tough to beat so much programmed artificial intelligence doing the trading. Somebody will figure it out some day. Maybe cause them to spin out of control and cause major bankrupsies in the fast trade companies. What a glorious day that will be.

[safeharbor37]

I'm not into short term trading so don't have much interest or knowledge about it. What I was trying to say is that the entities that use multimillion dollar computers aren't interested in competing with you unless you can afford a multimillion dollar computer and they will make trades which justify the cost of the computer which means big trades. You don't go into competition with someone who outmatches you in every way. They are probably smarter than you are. Your advantage is that you're picking the leavings, the things they aren't interested in because it small and doesn't provide enough potential to justify their interest.
In general, I've noticed that the big investors follow patterns. The idea is to understand the patterns so you can take advantage of their tendencies.
When I evaluate a stock I always check StockScouter and see if institutional buyers are buying or selling. It doesn't determine which way I'll go, but it does tell me something. Listening to the stock people on TV sometimes helps, but you have to know what to pay attention to and what to ignore. For me, knowing which way the market is going is most helpful since then it's just a matter of how much you make rather than if you make, money. I don't short, but I assume that you can do the same thing with that.
For those who are active traders, I'd simply suggest that you don't try to outdo professionals with assets you can only dream of, but to watch what they do and determine how you can take advantage of it.

[Aman A.K.A. Ahamburger]

Both posts 89 and 93 are brilliant Safe, I really like this point though...

In general, I've noticed that the big investors follow patterns. The idea is to understand the patterns so you can take advantage of their tendencies.

Even the CPU's are screaming sell, sell, sell, at some point. I have no problem adding good companies to my basket when they are being tossed out of the window. It doesn't matter if it's a CPU telling traders to do it, or their emotions, I'll take it either way.

[uncle23]

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so, we can't compete but we can adapt............

[uncle23]

......copy from Kurzweil newsletter.......



Mysterious algorithm was 4% of trading activity last week
October 11, 2012
[+]hft_chart

Generic high frequency rrading chart (credit: Nanex)

A single mysterious computer program that placed orders — and then subsequently canceled them — made up 4 percent of all quote traffic in the U.S. stock market last week, according to the top tracker of high-frequency trading activity.

The motive of the algorithm is still unclear, CNBC reports.

The program placed orders in 25-millisecond bursts involving about 500 stocks, according to Nanex, a market data firm. The algorithm never executed a single trade, and it abruptly ended at about 10:30 a.m. ET Friday.

“My guess is that the algo was testing the market, as high-frequency frequently does,” says Jon Najarian, co-founder of TradeMonster.com. “As soon as they add bandwidth, the HFT crowd sees how quickly they can top out to create latency.” (Read More: Unclear What Caused Kraft Spike: Nanex Founder.)

Translation: The ultimate goal of many of these programs is to gum up the system so it slows down the quote feed to others and allows the computer traders (with their co-located servers at the exchanges) to gain a money-making arbitrage opportunity.

The scariest part of this single program was that its millions of quotes accounted for 10 percent of the bandwidth that is allowed for trading on any given day, according to Nanex. (The size of the bandwidth pipe is determined by a group made up of the exchanges called the Consolidated Quote System.)

“Your scientists were so preoccupied with whether or not they could, they didn’t stop to think if they should. … We’re in the hands of engineers. … All major changes are like death. You can’t see what is on the other side until you get there.: Jurassic Park. — Ed.
Related:

This is what Wall Street’s terrifying robot invasion looks like

[uncle23]

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I'm reading How to Create a Mind........Kurzweil's latest book...........I think we may find a clue here on how to compete before its too late.......