from gambling bots
the last period of time I have been rather fortunate to be able
to observe some rather tricky software that operates 5 days a
week on an overseas share market - a bot - which is simply not
available to the general public and it has been
a most fascinating and educational experience.
is not my normal area of financial activity or my usual range
of fnancial investment and it is really "heavy duty stuff"
that deals in many millions of dollars of transactions every day
and one which works in a continuous environment of milliseconds
and real time instant transactions. It is not for the weak of
this came to pass is unimportant but you may find the following
observations interesting and are certainly not in breach of any
confidentiality agreement. Now bear in mind that this is just
one bot of many that it is in the world of share market trading
and it leads me to ask what future there may be in "manual
trading" by individual traders, or punters if you like, as
the mathematical advantage that these software bots have is enormous.
you had some extreme knowledge and research to draw on as an individual
that wasn't available to 99% of the "other experts",
your path to mega riches in the world of share traders it would
seem impossible or extremely hard to imagine at best.
what are their advantages? Well a couple of things "leap
off the page" for mine. Firstly their mathematics is absolute
and they make no errors in calculation. None.
parameters you place in the programme are followed explicitly
- no variations or unfortunate errors that a poor human makes
in the "heat of battle".
other thing that strikes me as really important is that they don't
get impatient, they don't get tired, they don't get bored with
the repetition. They don't care if you win or lose and have no
emotions. Now if you were punting on the horses yesterday, reflect
upon that statement and how it related to how you may have felt
at different times of the day.
mathematical discipline of this thing is an awesome thing to watch.
Firstly, and naturally, it should be pointed put that
there are some human decisions regarding which stocks to trade
and either buy or sell "inputted" to begin with and
I have no idea how these decisions are made. Obviously they would
be made with a great deal of research and past experience. Not
dissimilar I would imagine that we, as mere horse racing punters,
would describe as "form".
the clinical way this thing goes about its business is what fascinates
me. Regardless of whether it is buying or selling, as long as
it is within its price parameters, it consistently, and I mean
100% of the time, always will only buy its target at at least
one "base point" lower that what may be in the market
at the time or sell at least one "base point" higher
- depending on where it's very complicated calculations and algorithms
perceive the market to be true.
this calculation and forecasting happens in absolute milliseconds
and continues for hour after hour while this particular share
market is trading.
here's the rub: the difference between what we as humans might
do in the space of the day and what this thing does is enormous.
I watched it the other day trying to buy 400,000 shares in a particular
company for hour after hour at $1.32 but the shares were in the
market at $1.33 and static. It's target range was $1.30 to $1.34.
And so it sat. Like a mexican standoff almost all afternoon.
what would have happened if we as mere human nothingnesses had
have been attempting that? Hour after hour for 1 cent a share?
It is not hard to conclude that after the first few hours of it
all, most of us would have thought: "bugger this - I have
to go to the supermarket and get some stuff" or one of the
other hundred things a day we have to do in the space of an average
day and would have paid the extra 1 cent just to get it over and
done with and move. After all it is only about 0.75% of the trade!
1. It doesn't take much thinking to work out that if this was
just one of the trades for the day (there were seven of them from
memory) that 0.75%, if applied over all seven would add up to.........ooops!!
the people that use thing don't tolerate any oopsies for terribly
long! To my way of thinking, the greatest advantages mechanical
trading bots have over the rest of us are these:
They don't get impatient.
don't care if they "win" or "lose".
They don't get tired.
They don't make mistakes.
don't get distracted by other activity.
have no other time responsibilities.
having written all that, the question than gets asked "so
which bot am I using for racing?". Well, paradoxically, I
still mostly bet manually but a few afternoons a week, when "other
things" call, I do use a bot on Betfair to do the business
when I simply can't be at the computer. And how do the side by
side results compare? I'd say over the last 12 months about line
ball with the bot trading doing about 5-6% better. But is it 5%
less entertaining? Is the boredom and repetition worth the extra
may well be the crucial question for most!
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