Meet Your Competition: Deep Blue
One of the most pointless and misleading topics of conversation for amateur traders is the idea of a "level playing field." Cynical amateur traders believe that the reason they lose to professionals is that professionals have "inside information" and other illegal advantages.
Professionals do indeed have significant advantages, information and other, but most of them are perfectly legal. Professionals routinely beat the stuffing out of amateurs not because the playing field isn't level but because the playing field's being level or not is irrelevant.
The playing field in Yankee Stadium is "level." If you and your beer-league softball buddies visited the Bronx, however, you would still get your clocks cleaned--and not because not because the Yankees cheated. You would get them cleaned because the Yankees are the most skilled, best informed, best trained, most competitive ballplayers on earth. And so it goes in the financial markets.
Today's Journal has an illustrative item about the computerized trading taking over the London futures markets. Like your chances of competing against thousands of professional futures traders armed with such computers? Then presumably you would also like your chances when playing chess against Deep Blue.
Futures Traders Take On Next Hot Model
By ADAM BRADBERY
February 19, 2007LONDON -- The biggest trader in one of Europe's main futures contracts isn't a person -- it is a machine. So is the second. And the third.
Trading systems that use complex mathematical codes to quickly weigh a huge number of possible trades and execute them faster than a human are squeezing the independent trader as they change the way futures contracts are traded...
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