Change?

Feedback in tonight:

“Mike: What do you think the effect of automation is on this year’s markets? To me its business as usual, to some others they think its the end of the manual trader. What do you think? is there any data existing to show how computer automated trading increases have really changed the markets?”

Couple points:

1. Trend followers in many instances have been automated for 40 years. What’s new there?
2. What about markets has changed?

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9 thoughts on “Change?

  1. mike, will the automation make markets less volatile at some degree and make trends last longer? what is your opinion on this?

  2. Personally, I read these articles on high-speed computer trading as a way for Wall Street firms to scare people into sending money to them to manage (e.g. how can an individual investor or any company outside of New York City compete with these high-speed systems).

    Makes me even more confident in the Trend Following, over the long-term approach.

  3. Markets are simply human perception aggregated. I don’t see humans changing any time soon.

  4. “Heaven is on the other side of that feeling you get when you’re sitting on the couch and you get up and make a triple-decker sandwich. It’s on the other side of that, when you don’t make the sandwich. It’s about sacrifice…. It’s about giving up the things that basically keep you from feeling. That’s what I believe, anyway. I’m always asking, “What am I going to give up next?” Because I want to feel.” ~Jim Carrey

  5. Remember people were complaining about ‘program trading’ in the late 80s and early 90s. Did it make any difference? At the end of the day either there is a trade-able trend or there is not. This likely won’t change, especially not across 100 equity, fixed income, forex and commodity markets.

  6. what is the percentage of money that is traded systematically and following trends? i mean, when there are more people trading systematically (without getting emotions involved) isn’t it harder to get profits out of the markets, even with a trend following method? or are there so many people that continue to throw money in?

  7. Program or systematic trading is not a problem for trend following. Systems are just their designer’s perceptions and decisions based upon those perceptions reduced to “computer code”. Also, most systems are usually based solely on past history and rarely take current price action into effect.

    Blaming “changes in the markets” on system trading is just another manufactured excuse by those who feel the need to “understand” the markets and why they can’t seem to profit.

  8. read this post and was reminded of a Livermore quote I read in one of Michael’s books…… to sum it all up human nature never changes, just the suckers.

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