Trade Ideas Blog

How to Hire the Best Computer Traders, And Fire Yourself

Sep 24, 2012

The Future of Investing and Trading is Here Now

Retail Investing is undergoing an evolutionary metamorphosis. I was watching the future in real-time while participating in a conference call meeting. On one hand, I was logged into the weekly Trade Ideas development meeting. There is never an end to our development, and our technology changes weekly to adjust to a market environment that is very different from the one that your parents invested in. Our rapid development, however, is not really the point of this blog post.

While I was speaking with development and discussing new feature priorities, my Trade Ideas software was trading the market for me, all by itself. Allow me to be more specific. The software was running strategies, 10 different strategies to be exact. Once again let me be even more specific. Each strategy inside Trade Ideas is like a trader that is specialized to look for a specific set up. One trader is looking for trading opportunities when the market is up and continuing to trade higher, one trader is looking to trade a sideways market, another trader is looking for downward pressure, and so on and so on.
This is not a black box system. This is the ultimate expression of technology helping the human to be better. Each of the strategies is relatively simple, to an extent. And, they’re nothing like the sub-second arbitrage hunter robots that are much maligned by the press writing about HFT (High Frequency Trading). Each strategy’s hold time may vary, some are 30 minutes, some hold times are hours, and some hold times are all day. A few of my computer traders are swing traders looking at the longer term trends and evaluating fundamental data along with price data. The bottom line is that the computer is helping me do something that I could not do even if I was 19 years old and hopped up on Aderol :-). My computer traders are dissecting information information faster, and with more accuracy than any of my human counter parts.
    • Tracking Social Activity? Check
    • Checking Multiple Time Frames? Check
    • Monitoring Profitability? Check
    • Scanning Multiple Technical Indicators? Check
    • Watching the stocks versus the whole market? Check and Check
As an investor or trader, unless you know something that everyone else does not know, this is the best you can do. That brings me to the next point. I learned to trade the hard way, via bloody noses. What does that mean? Well it means that as I traded, I made mistakes and applied lessons from those mistakes to my next trade. While I was one of the lucky few that made it, this was a very inefficient method. I made an immense amount of mistakes. My computer traders are way better than I ever was. Strategies don’t get tired and they learn like a machine (machine learning). My computer traders play thousands of trades per day to find the most statistically viable options for the next day, and this continues day in and day out.  It looks something like this:

Calender Heat Map that is used by my Computer Trader
First notice that we don’t win every day, that is ridiculous to assume. We do win a lot though. πŸ™‚
The best part of this was my realization of what was actually happening. Here I was in the middle of business that did not relate to actual trading. I was in the middle of that software development meeting and my computer was sitting there just taking the market to task, and making money! I had chills up my spine because I know for a fact that what I was witnessing is what every single investor wants. You may not be aware of it, but once you see it and taste it you can’t go back. It’s like swallowing the blue pill in the Matrix. It will change you!
Because of this experience, we started a whole new business called Execution Consulting. For those who want to experience it, we will help them create their robotic assistants to go out and crunch numbers and trade for them. So far what we hear from our customers is WOW!