4 ms·

Which by definition is impossible... Once two different traders discover how to 'perfectly' trade, the game changes and as they say 'here we go again'

munk-a 8y ago
I disagree, the solution to remove stock market traders is to figure out a way to examine financial data and projections to such a fine degree that stock trading is no longer a sensible thing. Imagine a currency trader focused on USD & CAD, what would happen to their job if Canada decided to permanently pin their currency on the USD with a guaranteed exchange of .5 USD for 1 CAD, the markets surrounding arbitraging the currency would dissolve as .5 USD would always be 1 CAD (now in the real world there might be stability speculators, if Canada was viewed as politically unstable there might be a purpose to purchase .4 USD for 1 CAD, but ignore that for the purpose of the scenario).
- TheAlchemist 8y ago
  Well, you are making quite a lot of assumptions here: - currency is very different from equities - while one could argue that a central bank deciding to peg it's currency to $ is a realistic scenario, it simply doesn't make sense for equities (an equity is basically a right for present and future earnings of a company - good luck 'perfectly' predicting that !) - as you note, there would still be speculators, since there is always uncertainty. There are numerous examples of countries pegging their currencies and then when unexpected happens... - traders / sales would still compete for order flow of the clients (and get the cut), so there would still be a game to be played albeit for smaller margins
- subroutine 8y ago
  To name just a tiny fraction of things that'd be required for a perfect stalemate between automated stock trading platforms (due to them all being able to predict the market with perfect accuracy): * actions of any given platform doesn't meaningfully influence the market * all have ability to forecast weather with 100% accuracy * all have ability to perfectly predict human behavior * all acquire the exact same news at the exact same rate * all connect to the same exchanges with the same latency * all have the same amount of capital to leverage trades Simply put, there are incalculable ways for a trading platform to gain advantage over another, so I don't think this will be an issue in many lifetimes.
  - anonu 8y ago
    >> * actions of any given platform doesn't meaningfully influence the market Yes - this... Buying or selling even 1 share in the markets adds information to this giant calculating engine. Anything you do will alter the course of the future. I've never seen a backtested strategy that didn't look great on paper. The moment you drop it into the market - you can take a steep discount to your expectations.

munk-a 8y ago

I disagree, the solution to remove stock market traders is to figure out a way to examine financial data and projections to such a fine degree that stock trading is no longer a sensible thing. Imagine a currency trader focused on USD & CAD, what would happen to their job if Canada decided to permanently pin their currency on the USD with a guaranteed exchange of .5 USD for 1 CAD, the markets surrounding arbitraging the currency would dissolve as .5 USD would always be 1 CAD (now in the real world there might be stability speculators, if Canada was viewed as politically unstable there might be a purpose to purchase .4 USD for 1 CAD, but ignore that for the purpose of the scenario).

TheAlchemist 8y ago
Well, you are making quite a lot of assumptions here: - currency is very different from equities - while one could argue that a central bank deciding to peg it's currency to $ is a realistic scenario, it simply doesn't make sense for equities (an equity is basically a right for present and future earnings of a company - good luck 'perfectly' predicting that !) - as you note, there would still be speculators, since there is always uncertainty. There are numerous examples of countries pegging their currencies and then when unexpected happens... - traders / sales would still compete for order flow of the clients (and get the cut), so there would still be a game to be played albeit for smaller margins
subroutine 8y ago
To name just a tiny fraction of things that'd be required for a perfect stalemate between automated stock trading platforms (due to them all being able to predict the market with perfect accuracy): * actions of any given platform doesn't meaningfully influence the market * all have ability to forecast weather with 100% accuracy * all have ability to perfectly predict human behavior * all acquire the exact same news at the exact same rate * all connect to the same exchanges with the same latency * all have the same amount of capital to leverage trades Simply put, there are incalculable ways for a trading platform to gain advantage over another, so I don't think this will be an issue in many lifetimes.
- anonu 8y ago
  >> * actions of any given platform doesn't meaningfully influence the market Yes - this... Buying or selling even 1 share in the markets adds information to this giant calculating engine. Anything you do will alter the course of the future. I've never seen a backtested strategy that didn't look great on paper. The moment you drop it into the market - you can take a steep discount to your expectations.