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My thanks to Steven and Timothy for their posts. They made me realize that
my post could have been interpreted as predicting that computers run by big
companies will be the only way to trade in the future. That was not my
intention. I think:
> Being a great programmer will not help you create a great trading
system if you don't know what to program.
> Being a great trader will allow you to make lots of money but it
is a skill that is hard to replicate and is labor intensive. To
achieve this status is difficult, usually requiring learning by
expensive experience, since no one will train you and tell you
all of their secrets.
> Being a great mathematician might allow you to be able to find
tradable patterns with your statistics and incorporate these
into a good trading program with the help of a good programmer.
But a combination of all three skills is certain to be a winner in the
future, and lots of parties are trying. The key point is that software
trading systems continue to get better over time as more and more expertise
is incorporated into them. Such developers build on the shoulders of those
before them, whereas each individual trader has to start from scratch.
But only big institutions can hire the top programmers, mathematicians, and
traders to create such software, and then, by necessity, they have to go
after big bucks to support their big staffs.
This still leaves a lot of opportunity for us little guys to pull in a few
thousands of dollars from the markets now and then. Whereas the big guys
move the markets with their volume, our trading activity is too small to
affect the price. We can go after the wake created by their big moves and
take advantage of profit possibilities too small for them to worry about.
And a clever trader will always be able to spot opportunities before they
are widely recognized and added into the trading systems. It just gets
tougher and tougher over time as the trading systems get better and better.
No one individual is likely to be an expert at all three of the above
skills, but lots of people seem to be putting together systems that work
pretty well. Last fall I attended a meeting of several hundred "market
timers", money managers who use computers to manage money by short-term
trades. Most of them were doing pretty well with what seemed like pretty
simple techniques.
And as individuals continue to work on this and continue to trade ideas,
the general level of knowledge will continue to increase so the little guy
with a PC, some programmable trading software, and some programing skills
will still be able to do OK even against the big guys.
Bob Fulks
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