Robotic Trading by Martha Stokes
What works and what doesn’t? Only experience will tell. Find
out why you need to constantly modify a trading system so it
gives you the results you want.
At a recent investment trade show I attended, the
booths displaying charting software looked nearly
identical. High-tech charts blinking red and green had hordes of traders gathered around them. Vendors were
proclaiming the age of the emotionless trade, triggered by an
automatic buy or sell signal generated by a computer that
never makes a mistake. Traders have flocked to these automated
trading systems in recent years in a mass frenzy typical
of a market boom.
COMPUTERS OR THE HUMAN BRAIN?
Look around you. If these automated trading systems are so
perfect, if the computer is better at selecting stocks than a
human brain — the most advanced and complex organism on
the planet — then why aren’t those retail traders doing better
in the stock market? For that matter, why would large
institutional investor and trader firms even need high-salary
managers and advisors? Stock prices do not follow a set
mathematical process, which is how computers are able to
crunch numbers instantaneously and how most automated
trading systems function.
Contrary to popular opinion, computers have not gotten
any smarter since the day Bill Gates started Microsoft. In fact,
computers are only capable of following a set sequential list
of commands written by a human brain. And at this point,
computers are highly limited to mathematical formulas that