Humans program the computers. These are not "smart", they
are black boxes reacting to prices, which adds to the
disconnect developing between prices and reality, IMHO.
There is no ideal program, cause only a finite amount of
money is for grabs.
1) Hedge funds bubble, many use automatic trading black
boxes, based on some TA models, which trade in both
directions. The result? Less volativity,
less profits for each one of them, IMHO. That's what we have
seen so far.
2) A different type of programs, LTCM-like, which is based on
an assumption that the market is a random walk. Those robots
have been winning the game for the past 5 years, more dough
to them. The proverbial picking up nickels
in front of the steamroller. What is the event that will cut
the profits for this one? The steamroller. Is it coming?
I believe so. When? Who knows. Why? Cause you can't get
something out of nothing. Once the other side of the trade becomes
broke, the game is over, stuff collapses under its own weight.
Can you make money on "random walk"? You sure can, and tons of
it, but I just think that trade is very crowded right now. |
