Computerized Trading

[donaldduke]

The acronym PodG Logic according to consensus from a handful of very well informed sources appears to stand for Precision Ortho-Dynamic Gradate (System) Logic. It is smugly intimated success has finally been achieved in creating the truly first fully automatic black box system.

Apparently this breakthrough bolt on is capable of selecting instruments in order driven markets with significant liquidity, selecting the entry point, placing the stop, trailing it, selecting the exit, removing the stop and thus executing the trade automatically, putting itself on alert / lookout by sweeping for new signals in a variety of chosen instruments, selection, definition of direction and potential of move, and then replicating the cycle, with failsafe parameters. This would usher in the era of fully automated trading and is a revolutionary concept.

Whats so revolutionary about this? Most programmers on this board can knock up such a
program in a few days of coding.

 

[jmreeve]

The vast majority of programs are simply tranching very big orders by feeding smaller orders into the market. This just saves the time and cost of having someone do the same tedious job. There are also stat arb and market making programs that also do jobs that were once done by hand.

The decision making process that drives all this has not changed all that much. In the main part it is driven by fund managers making decisions based on fundamental, technical and economic data. In most cases this is still discretionary but the decision making process may also be programmed and automated on computer as some sort of mechanical system. As far as I am aware, mechanical systems have been used in markets going back at least as far as the early 1900s and the process of automating the order entry has been ongoing since the 1980s so is nothing new.
Even where automated mechanical systems are used to time entry and exits there still tends to be quite a bit of discretion used at the portfolio level in deciding the capital allocated to each market or system.

So there is really nothing that revolutionary in most of the computer trading.
It is merely an evolution of what already existed, designed to save time and provide efficient execution. Computer trading can make you rich but it probably wont and the financial markets will carry on, as they always have, changing and being unpredictable.

 

[SOCRATES]

But the difference with this new idea, as intimated to me is that additonally the bolt on has a separate additional bolt on compatible to the data and incorporates a scanner. It is the presence of this scanner it is reasoned, that effectively alters the goal post significantly. This is because this appears to be not only an evolvement of what you describe above included a similar mechanism used in tranching and automated execution but additionally a selective process that can be preset with a given menu of instruments.

 

[Tuffty]

"there is very little difference between a mechanical system and a discreationary system"

I've only come across one reference to an analysis that compared the performance of discretionary traders and systematic traders. This indicated that the best discretionary traders out performed the systematic ones. However, over the whole sample the average performance of systematic traders was better than that of the discretionary traders.

 

[JohnDoe]

.....


Computers do not suffer from fear, anger, hope, laziness, revenge,
impatience,stress,tiredness,greed,boredom,excitement, pride,ego .. the list is endless.

Computers dont gamble with losses and take profits early, they dont double up after losing, they
dont try to get back at the market after losing.

Computers do not suffer from these things,

....

Neither do traders, after all, its just money - and there are more important things in life.

There are a lot of pretend traders who do suffer these ailments, but this is only because they give up too easily or are too lazy to acquire the right skills. Often both.

 

[fmaher]

Could anybody comment on a 'new' mechanical system :- Stock-Signal-Pro, sold by Bill McKinley of Investing Systems?
''A completely automated swing trading system''

newby rookey.