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Imagine how many HFT algorithms are out there trying to exploit every micro trend to the extreme. I am not in that game, but I can imagine all the things I woul
by dumbfounder 4y ago
Imagine how many HFT algorithms are out there trying to exploit every micro trend to the extreme. I am not in that game, but I can imagine all the things I would try, and I know there are really smart people and obviously a ton of money invested in it. Trying to find something simple that consistently makes money for a long time would be nearly impossible because the patterns would be found and exploited by many until they scrubbed out any potential gains. (But then again if someone did find it they wouldn't share). So you need to get novel and pour all sorts of external data into your models to have any edge. Something this simple just wouldn't be a thing. But it is still interesting to understand.
- evrydayhustling 4y agoAlgo trading teams are indeed research shops that have to continually replace their strategies. Often times success is less about the cleverness of a prediction than clever engineering (technical or contractual!) that makes a known pattern investable. Or else about being earlier to identify emerging, short lived patterns so that you can profit from more of their lifecycle. Teams make long term investments in technologies and strategies that help them do these things repeatably.
- rootusrootus 4y agoI think at this point the traditional stock market has so much algorithmic trading going on that making your own algorithm that can consistently win is basically impossible. But there are other less popular markets that don't receive the same attention.
- jjtheblunt 4y agoWhat about finding a company with reliable business model and stable dividends and reinvesting those, instead of trying to do HFT?
- rootusrootus 4y agoI don't think too many people would suggest algorithmic trading as a retirement strategy. Nor is investing in a single company a great plan, regardless of their dividend stability. I'm a confirmed Boglehead myself, but I do enjoy playing games with my lunch money. Options, crypto, or just individual stocks if I like the company. And yeah, it does help if they are a Dividend Aristocrat if I plan to hold that stock for any length of time. I've also considered trying some algorithmic trading at lesser known markets, because it is interesting.
- kangda123 4y agoIt depends. Sure an obscure crypto or betting exchange does not have many competitors, but that's not because no one cared, but because even with perfect strategy it's going to be hard to make $$ if daily volume is 10k. How much can you reasonably extract? Conversely, traditional stock markets is where relatively unsophisticated players do multi-million transactions all the time. This is where the money is. You might need to fight for it or it might be handed over on a silver plate by some redditors.
- adversaryIdiot 4y agoAlgos or not, the game will always be about predicting the future and there will always be opportunities. Otherwise the markets would stay flat.