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Archive for January 2012

High-Frequency Trading Up 97% In Y2011

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High-frequency trading volume on Nasdaq OMX in Nordic markets (Sweden, Denmark, Finland and Iceland) is up 97% to €170 billion. The link is here.

Take this as a confirmation of a trend toward system trading. There are no alternatives — buy & hold is dead, bonds yield near zero interest and are prone to disaster … System trading is one of the soundest bets, at least until the governments succeed to debase the paper [fiat] money to the point where it become a no-brainer to hold anything but paper money — then buy&hold will become a viable investment method again.

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Written by A.S.

January 5, 2012 at 6:47 pm

Posted in Uncategorized

DIY System Trading

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Can a person, having full time occupation, do the system trading by himself? The short answer is “Yes, but too risky”.

Why? By far the hardest, the most time consuming work that requires certain qualifications as well is system development itself. And this is not an issue. Companies like Covestor, Collective2 or Zulutrade have done a good job to offer sufficient amount of back-tested and well-maintained trading systems to choose from. To acquire some basic working knowledge on trading system analysis shouldn’t be a major problem either.

The key issue with DIY system trading is still far from 100% reliable routing of the trade from the system vendor to live account. The hard fact is that automated system trading from to time results in mismatched positions in live account. Mismatched positions, if not corrected in timely manner, is one of the costliest mistakes one can make in system trading.

Written by A.S.

January 5, 2012 at 5:59 pm

The most important in system trading. A billion dollar issue to some.

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On balance, hedge funds lost money in Y2011. As some restructured and some changed their modus operandi, one qoute I find particularly interesting as it highlights probably the most important single issue in system trading:

Managing Director [of D.E. Shaw] Anoop Prasad credited the gains to a toughened attitude toward the firm’s models. “We understand that alpha decays,” Prasad said. “We are unsentimental about eliminating models that have decayed or died”.

That’s it. Identify/use performing trading systems and phase out non-performing ones. The  article is here.

Written by A.S.

January 1, 2012 at 10:42 am