Trading bots
When we imagine financial markets most of us imagine guys in suits or blue-jacketed brokers who scream and yell in the room with dozen of screens with different charts and rushing to fill orders as electronic displays tick the latest stock prices. That is what we imagine from illusion that movies bring. Well, it used to be like that, but not anymore..
Once upon a time, those who wanted to buy or sell a stock, would call their brokers on the phone. Brokers would jot orders down on pieces of paper and stamp the time of the calls on order tickets. They would then direct the orders to their traders, who would contact their floor broker and so on, till the answer- stock has purchased.
It was manual and slow process. If there were no traders or brokers on the exchange floor, then trading didn’t take place because that is where buyers and sellers came together to transact since the earliest days.
Then appeared computers, internet, different softwares, hardwares and evolved the industry over time even more. Now funds managed via computerized systematic trading strategies, often referred to as investing robots or bots are the reality.
Only 10% of trading volume now comes from human investors, data from JPMorgan Chase & Co. cited by Bloomberg. Percentage could change but story stays and it is that humans only research, control while bots work, execute trading strategies.
Today “Wall Street” is actually in New Jersey about 11 miles from Manhattan. It is the epicenter of new financial markets, in which trading activity has migrated from Manhattan to data centers in northern New Jersey. Several financial exchanges house their matching engines — powerful servers that match buy and sell orders and provide updated pricing information. Huge data centers filled with servers different levels of security measures — including keycards, biometrics, security guards.
Equinix NY4 data center has 18 diesel generators, each capable of providing 2.5 megawatts (smallest nuclear power plant in the United States generates 582 megawatts, large Hydropower Plants 10–30 megawatts ) of electricity, supply emergency backup power during utility outage. During storm Sandy, these massive engines kept NY4 online for more than a week. Stakes are high, so the numbers are big.
NYSE Technologies data center, NASDAQ server farm, a Savvis data center and the Telx campus. All of these facilities are tethered together by low-latency fiber lines that allow customers to exchange data in milliseconds — and sometimes microseconds. Imagine the moment when right after the news stock has some action made by bots. Can you react on that immediately? Can you do it with your fingers and servers hundred miles away from exchanges?
Trading bots are faster than people and remove human biggest problem in trading- emotions. Algorithm, code, call as you want just follows the trading rules. Cold bloodedly follows the rules while human who trades his/her strategies fights against inner feelings. Different feelings as regret, fear of missing the trade, losing money, feeling greedy and not thinking clearly, facing constant failures, feeling as a king of the market till gets slapped in face for that!
Now you can take ”Legendary Wall Street” trader strategies that can be found on Internet and let the bots execute them. Even though I see trading more as an art than science, there are plenty of trades where you are needed just to monitor if everything is happening correctly or not. Let the numbers talk on balance sheet first!
If you trade crypto than you know how painful is the moment when the trade is missed because you are asleep or doing something else. As we know crypto trades 24/7/365 days per year, but you do not want to or can’t spend all that time at screen.
Recently I found out about one crypto-fintech company from my region- Wunderbit. Further I saw their Wunderbit Trading section that offered trading bot and copy-trading. (If you want to check it out as well-https://trading.wunderbit.co/en ).
Copy-trading for me is not interesting, but for newcomers is pretty good thing to have. Most likely we all know about it from funny eToro commercial with Alec Baldwin. How newcomers could handle that I am not sure. Want to note that you need to fully trust that “5 star” trader, even when he is facing several losing trades in the row… Moment that happens even with the best traders!
Regarding trading bot I am interested. I am open minded person and pretty curious towards other interesting things. Even if in the end I will not switch to bot trading I would like to check some trend following, pattern brake out strategies on alts. Would like to see the bot trading overall. What is that beast?!
In the beginning of trading I thought that stock market is more like investing for average Joe and trading for Wall Street sharks. But with time I realized that trading stocks/crypto is not exactly amateur boxer vs professional. It is more like wild life, jungle. After predator has eaten its meal there is opportunity to stack the stomach as well. Basically to cooperate. And as we know hyenas from time to time can hunt lions as well. Recently, GameStop short squeeze showed that to the world.
