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Future of trading still lucrative?


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Future of trading still lucrative?

  #1 (permalink)
MADayTrader
Amsterdam, NL
 
Posts: 7 since May 2013
Thanks Given: 0
Thanks Received: 1

Hello,

Fulltime lurker here.
Been studying technical analysis and sim-trading for 3 years, doing so-so.

I have to confess a fear of mine, which I hope you guys can lay to rest:

With the wake of A.I. will independent traders have a chance in the future on the markets? =D


Sorry if this question has a thread already.


Kind regards.

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  #3 (permalink)
 MacroNinja 
Buenos Aires Argentina
 
Experience: Advanced
Platform: NT, MT4, Sierra
Trading: S&P, Bonds, Crude, FX
Posts: 250 since Sep 2014
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Maybe by way of analogy, let's say you were a farmer 100 years ago and asked if it was still going to be profitable to be a farmer in another 20 years. Well, yes, if you went out to go get a tractor and some automation. If you couldn't afford the new technology, then probably not, if you could, then great! You'll make lots of money.

Fast forward to 2017. Is it still going to be profitable to be a farmer in another 20 years? Well...maybe. Assuming you have said tractor already (old tech), but now you also have the latest in drone technology to monitor crops, fertilizer, and genetically enhanced seeds. If so, great, you'll be profitable. If not...it will be a struggle.

So...can you scratch out a living in 2017 manually farming with a plow? Maybe for a few beans here and there...but you better have enough capital to afford the latest tech. If you can, you'll be fine.

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  #4 (permalink)
MADayTrader
Amsterdam, NL
 
Posts: 7 since May 2013
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@MacroNinja

That last line puts the threshold even higher for me. What are some examples of software that need to be purchased?
Which ones are you using, for the sake of example?

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  #5 (permalink)
 MacroNinja 
Buenos Aires Argentina
 
Experience: Advanced
Platform: NT, MT4, Sierra
Trading: S&P, Bonds, Crude, FX
Posts: 250 since Sep 2014
Thanks Given: 37
Thanks Received: 256


MADayTrader View Post
@MacroNinja

That last line puts the threshold even higher for me. What are some examples of software that need to be purchased?
Which ones are you using, for the sake of example?

We use a lot of custom built items, but still build maybe 50-60% to leverage off the shelf platform stuff.

Assuming your budget for tech is under $5k, I'd say the best stuff out there right now is 1) Sierra Charts for charting. (their stock indicators has really come a long way to earn this endorsement) 2) Peter Davies' Jigsaw, best commercially avaliable dom pro or non-pro out there. 3) TT ADL for order execution.

Lots of interesting AI modules to take the leading edge on. There's a few good threads about Tensor Flow out there.

Just remember, the best stuff out there either costs a lot of money, or isn't even for sale. If a vendor legitimately has the best pick axe for mining gold out there, they either decided it was easier to make money selling pick axes, or used it themselves to mine gold and chose not to sell it to anyone.

Good luck out there and stay safe.

PS You can either have the best tech, or just really cheap labor to do a lot of grunt work for you. Continuing the farming analogy, I asked a friend who sells fertilizer in SE Asia if his farmers had started to use drones yet. He replied that it was still cheaper to hire someone to literally walk around the fields to get the geographic data at $200USD per month rather than buy the drones. i.e. don't overlook the value of something powerful like Excel with a lot of data monkeys to run it to run your analytics. You can spend a of money on fancy software, but if a company like Apple or Berkshire is trading below fair book value...it doesn't take a lot of quantitative muscle to figure it out and invest.

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  #6 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
Posts: 644 since Nov 2011

I'd add, if you can find a trading partner then that would be really helpful whether your partner runs research or you just share your trading ideas. Also, learning how to do some basic backtesting and testing of your ideas using Tradestation and Easylanguage or C# and Ninjatrader would be a good step. Taking some basic statistics courses would also help give you some background if you wanted to pursue more advanced topics like machine learning. As for programming languages, Easylanguage is one the easiest to get started with and fast for prototyping. C# is good for general purpose programming and can do pretty much everything and it is what Ninja is based on. There's a lot of debate but I'd recommend Python for machine learning. Matlab, Excel, and R are commonly used, as well.

The other route you could go would be to try to step your game by giving yourself a short and focused "TST type challenge" on a free simulator. Really training or working on specific aspects and seeing what you can do.

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  #7 (permalink)
 
mattz's Avatar
 mattz   is a Vendor
 
Posts: 2,493 since Sep 2010
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MADayTrader View Post
Hello,

Fulltime lurker here.
Been studying technical analysis and sim-trading for 3 years, doing so-so.

I have to confess a fear of mine, which I hope you guys can lay to rest:

With the wake of A.I. will independent traders have a chance in the future on the markets? =D


Sorry if this question has a thread already.


Kind regards.

I am trying to understand the logic of your question. AI tries to imitate humans: voice, thought, brain process and even consciousness. So you asking if an imitation of you is better than you? "machine mimics "cognitive" functions"

Your competition are people who trade, have skin in the game, do research and have an amazing work ethic. My 2 cents and opinion.

Matt Z
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  #8 (permalink)
 
New Level's Avatar
 New Level 
East Coast, Florida
 
Experience: Intermediate
Platform: IRT/S5
Trading: ES
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The market is just an imperfect information game and though the evidence is undeniable that AI is better at perfect info games e.g. chess, checkers, and now go, it's now overcoming the best in the world at a imperfect info games beating four of the top heads up poker players https://www.wired.com/2017/02/libratus/

It's obviously only a matter of time....

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  #9 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
Posts: 644 since Nov 2011

Here's a more in-depth write up:

https://www.cmu.edu/news/stories/archives/2017/january/AI-beats-poker-pros.html

Right, to play devil's advocate, computers have a lot more "energy" or "work capacity" than people. Energy and intelligence produce power. Humans have a lot more intelligence. If computers get just even a little bit of intelligence then they could quickly and easily surpass humans.

By way of analogy, if we imagine that "trading" involves listening to a radio program for a "signal". A person will understand much more of that "radio program" and thus be able to profit from more scenarios provided that trading cost are low enough. However, there is no real cost for the computer to be patient to wait, as long as it can "confidence rank" its finding then it can wait until it is 99% certain it heard the "signal" and then trade on it. Even though, it is far less "efficient" than the human in understanding capacity, the work capacity can make up for it.

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  #10 (permalink)
 Alexander Savin 
Europe
 
Experience: None
Platform: RTP, IRT
Trading: ZB, FGBL
Posts: 53 since Apr 2016
Thanks Given: 53
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mattz View Post
I am trying to understand the logic of your question. AI tries to imitate humans: voice, thought, brain process and even consciousness. So you asking if an imitation of you is better than you? "machine mimics "cognitive" functions"

Wouldn't that depend on the time frame in question? Surely, on a micro level, it is becoming increasingly hard to compete against HFT algos, since they are faster than any human. In addition, expensive infrastructure provides an additional advantage to those who can afford it.

Higher time frames on the other hand are a different story. Here, I tend to agree with you. Much has been written about machine learning, deep learning and black boxes, and while such an approach can certainly help with developing alpha factor, I am not yet convinced that there is a benefit over an experienced trader with a good understanding of market structure, macro themes and crowd psychology.

Just adding my 2 cents to yours.

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