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To: Hawthorn

re Fluctuation:

Can trader algorithms sense a down turn and sell and then sense the bottom and buy back?


30 posted on 06/19/2018 8:03:40 AM PDT by bert ((K.E. N.P. N.C. +12 ..... Greetings Jacques. The revolution is coming))
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To: bert

>> Can trader algorithms sense a down turn and sell and then sense the bottom and buy back? <<

Sure, if we’re in “normal” times. But we’ve always gotta remember that the algorithms are far from infallible.

In particular, they can break down when genuine hysteria or panic hits the market.

(Think 9/11, for example, when markets had to be closed to avoid a total panic-based meltdown. In a situation like that, the algorithms are totally worthless.)


33 posted on 06/19/2018 8:11:12 AM PDT by Hawthorn
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To: bert
I write trading algorithms (in VBA for Excel) and can say that looking for an effective algorithm has all the excitement that prospecting for gold must have.

That said, after doing this for years, I have yet to strike the mother lode.;-)

I have written algorithms for every trading strategy and indicator known to man...and have yet to find one which can effectively predict significant stock movements over time.

I have even written algorithms which combine two or more strategies. Lots of nerd fun, but still nothing reliable.

From what I hear, the quants at successful hedge funds use information from data mining companies. For example I recently heard of a firm that was buying satellite streams so that they could examine freight truck movement from factory parking lots.

40 posted on 06/19/2018 8:40:23 AM PDT by RoosterRedux
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To: bert

No, they can not, they utilize multiple statistically correlations and hope they stay accurate. The models are adjusted when the previous coding no longer produces profits. What they do attempt is to rapidly trade larger amounts and hope to capture a penny or even less if that’s available and do so multiple times during the day.

Slap a transaction tax on intra-day trading and watch how fast the volumes on the exchanges shrivel up. No transaction fee if held 3 days, and scale it up to something that hurts if you close the same day. If you are a day trader you get maybe three free per day without the fee.

These machines are DANGEROUS and combined with the ETF’s that allow shorting without an uptick will one day cause an event we don’t want to contemplate. I was a trader at Drexel and the last 90 minutes of the crash of 1987 will NEVER GO AWAY from my memory.


45 posted on 06/19/2018 9:17:08 AM PDT by LRoggy (Peter's Son's Business)
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