Man vs. Machine

[Jason Rogers]

Interesting article today on Bloomberg: Humans Beating Robots Most Since ’08 as Trends Shift: Currencies

"Currency funds that use computer models for trading decisions made 0.9 percent this year through May, compared with 2.5 percent for those that don’t, the biggest margin since 2008, according to the latest data from Parker Global Strategies LLC...

"“Central banks have become the insider traders of the currency market, which is a paradigm shift that systematic traders cannot pick up as well as fundamental traders,” Richard Olsen, the founder of Olsen Ltd., who has designed currency-trading models since 1986, said yesterday in a phone interview from Zurich."​

The article makes a great point about how discretionary traders can adapt to a new market environment faster than automated systems which rely on historical models. But do you think the computer models will eventually catch up?

Personally, I allocate roughly 90% of my risk capital to automated trading, and only set aside about 10% for my discretionary trades. I favor automated trading, because it helps me to eliminate emotion and to take advantage of trading opportunities 24 hours a day.

How about you guys? Do you prefer automated trading or discretionary trading?

 

[Shakone]

There was a good thread on this a while back from Robster et al

I'm discretionary. If you can automate it fully, then I'd suggest automating it. For some approaches, automation just isn't an option.

The other related issue besides money is what you get out of it. If you automate, and you spend all that free time researching and looking for improvements, then fair enough. But for me there's definitely something about being in the market and learning by experience. Improve by doing. Seeing things that switch on lightbulbs. And it's more enjoyable

 

[random12345]

Interesting article today on Bloomberg: Humans Beating Robots Most Since ’08 as Trends Shift: Currencies

"Currency funds that use computer models for trading decisions made 0.9 percent this year through May, compared with 2.5 percent for those that don’t, the biggest margin since 2008, according to the latest data from Parker Global Strategies LLC...

"“Central banks have become the insider traders of the currency market, which is a paradigm shift that systematic traders cannot pick up as well as fundamental traders,” Richard Olsen, the founder of Olsen Ltd., who has designed currency-trading models since 1986, said yesterday in a phone interview from Zurich."​

The article makes a great point about how discretionary traders can adapt to a new market environment faster than automated systems which rely on historical models. But do you think the computer models will eventually catch up?

Personally, I allocate roughly 90% of my risk capital to automated trading, and only set aside about 10% for my discretionary trades. I favor automated trading, because it helps me to eliminate emotion and to take advantage of trading opportunities 24 hours a day.

How about you guys? Do you prefer automated trading or discretionary trading?

I use automated trading and prefer it as it actually makes it easier for me to note when returns are outside of the SD I was expecting and adapt, but the article actually refers to computer modelling and quant funds, which are not necessarily what people here in the retail world would call automated traders, even if they use computer models to make a decision or even place those orders.

They will also be employing a relatively large number of supposedly correlated (one way or another) instruments and spreads via said computer modelling to hedge off risk and aren't a direct compare with fully automated algo trading on a few currency pairs, which most funds would consider naked. They may use a b fund or prop fund to trade leveraged up automated systems in this manner, which would have r/r returns far in excess of those published based on total capital under management. I think people on these boards get confused by the 10-35% returns seen by Funds and what that actually means (they often directly compare the published returns with their own trading and think they are out trading a fund - when in fact the fund will often have sections with smaller amounts of capital that are returning over 100 per cent on futures and other margin instruments etc.).

 

[Jason Rogers]

But for me there's definitely something about being in the market and learning by experience. Improve by doing. Seeing things that switch on lightbulbs. And it's more enjoyable

I couldn't agree more

That said, my discretionary trades aren't yet as consistent as the systems I run, so I allocate a smaller portion of my portfolio to them.

 

[Rockfeller]

I guess I am old fashioned and I use half automatic system.

 

[Rambo35]

The other related issue besides money is what you get out of it. If you automate, and you spend all that free time researching and looking for improvements, then fair enough. But for me there's definitely something about being in the market and learning by experience. Improve by doing. Seeing things that switch on lightbulbs. And it's more enjoyable

I completely agree with you on that one. I see nothing wrong with automating our own strategy in order to free up some time and seek improvements, but I would never substitute human supervision. I think a hybrid approach is the best solution.

 

[NVP]

Interesting article today on Bloomberg: Humans Beating Robots Most Since ’08 as Trends Shift: Currencies

"Currency funds that use computer models for trading decisions made 0.9 percent this year through May, compared with 2.5 percent for those that don’t, the biggest margin since 2008, according to the latest data from Parker Global Strategies LLC...

"“Central banks have become the insider traders of the currency market, which is a paradigm shift that systematic traders cannot pick up as well as fundamental traders,” Richard Olsen, the founder of Olsen Ltd., who has designed currency-trading models since 1986, said yesterday in a phone interview from Zurich."​

The article makes a great point about how discretionary traders can adapt to a new market environment faster than automated systems which rely on historical models. But do you think the computer models will eventually catch up?

Personally, I allocate roughly 90% of my risk capital to automated trading, and only set aside about 10% for my discretionary trades. I favor automated trading, because it helps me to eliminate emotion and to take advantage of trading opportunities 24 hours a day.

How about you guys? Do you prefer automated trading or discretionary trading?

just sounds like another firm trying to flog their services to me

N