16 replies to this topic

[12SPX]

The most bizarre thing is you can go all the way out to the April 1500 puts that on Friday were going for $10!!!  Wow never seen that before!!

[EntropyModel]

 

 

Real people don't push the market from highly positive to highly negative in one minute flat. Certain parties are deliberately throwing this market under the bus with trading programs. We had no such programs in 1918 and there was no great pandemic route. Trade programs make reaction 10 times as extreme and without any human common sense, not something we need right now.

 

Real people, if you mean retail have been small part of trading volume for many years, its not new. The 'bots (and now sophisticated anti human AI's) dominate the tape.

The move you saw before the open was just a typical bear market short covering rally on 'good news', but yes they are 'speeded' up by 'bots.  

However, it would be almost impossible to remove the 'bots now without causing a massive liquidity issue.

The phrase here is 'what goes around, comes around' - these same 'bots drove the market up for years against 'all human common sense' as well.

Exactly. 

 

 

Yep - I noticed over my 20 years experience of this market, that's trading 3 virtuous cycles, and 2 and now 3rd vicious cycles ..that during the virtuous cycle participants believe in free markets, Government handout are bad, the market is not irrational it is simply natural price discovery by very smart investors.

 

When the vicious cycle begins, everytime (2000, 2008 and now)  it flips 180 to   free markets are bad( ban shorting, close the market, 'bots are bad ), Govt handouts on massive scale are great along with infinite FED market support, the market is irrational and not natural, and worldwide conspiracy is to blame.   

Edited by Entropy3.0, 23 March 2020 - 11:17 AM.

[gm_general]

Let me put it this way - lets say we put computers exclusively in charge of launching nuclear weapons - does that sound like a good idea? Computers have no common sense, and we have also seen this in other times (1987 and various flash crashes). Not sure what the answer is but maybe AI would help, some Asimov's law of trading robots.

[EntropyModel]

Let me put it this way - lets say we put computers exclusively in charge of launching nuclear weapons - does that sound like a good idea? Computers have no common sense, and we have also seen this in other times (1987 and various flash crashes). Not sure what the answer is but maybe AI would help, some Asimov's law of trading robots.

 

Computers just do what they are programmed, by humans - I am an ex programmer of very complex systems and some AI. THe issue is not 'computer/bot/AI', the issue your

talking about is called 'autonomy' i.e. allowing a program to make an important decision without a human checking that decision. For nuclear launch that would be bad, in markets

as far as I know it doesn't exist because that would make no sense . They do not have autonamy because they are simply executing 'buy or sell' programs for the hedge fund, or whatever big money player ...you are or can also run a buy/sell program but we are too small to leave a footprint on the market.

 

The BIG problem is NOT 'bots, its big market players acting in coordinated self interest, who are then big enough to move the market to their positions...which u or I cannot.

This has been going on for 15+ years i've seen it, getting bigger, both or upside and down side ..what I referred to as 'virtuous and vicious cycles', they will come like night and day

given this 'casino' is setup this way. 

[gm_general]

I am a developer in the financial sector but not in stocks. I used to know a person whose son wrote such programs for a hedge fund, leveraging options and such as I recall, I don't think it required some human intervention. Algorithms are only as good as their ability to react as intended to whatever circumstances they encounter - as an example programming Black Scholes has flaws in reacting to things like the Russian contagion of the 90s. But I have heard of programs that rake the news for keywords and some pea brain took advantage of this and planted fake rumors about some event at the White House to crash things. I have to agree there is some collusion factor at work.

[EntropyModel]

I am a developer in the financial sector but not in stocks. I used to know a person whose son wrote such programs for a hedge fund, leveraging options and such as I recall, I don't think it required some human intervention. Algorithms are only as good as their ability to react as intended to whatever circumstances they encounter - as an example programming Black Scholes has flaws in reacting to things like the Russian contagion of the 90s. But I have heard of programs that rake the news for keywords and some pea brain took advantage of this and planted fake rumors about some event at the White House to crash things. I have to agree there is some collusion factor at work.

 

OK but detail matters here. When you say 'I don't think it required some human intervention', that's not the same thing as 'autonomy'. 

Let me give you an example - 

I create a program runs 24/7 , require no human input - is that autonomous? it depends.

The autonomy would be if no human decision existed - that can only occur as far as i'm aware in programming in 3 ways

1. Formal rules - that's just normal programming, that we could so say settign up buy/sell signals. No autonomy here.

 

2. Heuristic rules - that's a non-machine learning type of AI i.e. and I did this in my job, you talk to domain experts (this case top traders) and you learn how they trade, and you

try to develop a 'system' ( a set of rules that they are DYNAMICS and ADJUST to market conditions just as traders do) . is tihs 'autonomy '..the 'decisions' are still encoded, even

though they are dynamic(change).

 

3. Machine learning - this is what most think AI's is, but alot of it is (2)...this is neural nets -  they 'learn' by pattern recognition, similar to humans, actually, nothing like humans and so AI

is nothing to do with human intelligence, that's 'fake science' which abounds.  I can talk about that if people want -  but is ALOT like a PART of human learning which is how we

identify certain patterns.   So u set this thing running, it see's patterns,  is that 'autonomy ' ...well,  how does it know what to do ..like BUY or SELL off those patterns? ..devil is in the detail,

how far down the rabbit hole do we go? ... in reality, that aspect 'buy or sell, and the amount of $ avaiable to the program is SET by a HUMAN - it has to be, these programs can't

just open credit lines and tap into funds   So, I guess 'autonomy ' is not binary/black or white, but like most things, its 'grey' on a sliding scale.   

 

You raise and excellent point about 'information' - it is 'flawed,  information is not perfect, we can say in information theory being 'true or false' is a probability. OK this is down the rabbit hole but I mention it anyway, It is an illusion to believe in 'facts or fake', there is only 'the probability of fact or fake' given the sum total of available information - '  nearly all people &programs would

- never gather ALL information - its too much, programs do it way better than humans for sure

- much of the information is 'incorrect - even in the given moment of time, but how do we know what? that is the hard question . u have to already know, what you didn't know - example, how much more you now about trading, that

u didn't 1 year in , 5 years in and so on ...all  assessment of information is the same .. information is thefore worth little compared to ability to  assess it, we know little about how humans do that, let alonr make AI's do that - so

sure AI's are just as bad as people as those assessment - call it 'cognitive  selection bias' or whatever.  

 

What i'm saying is, none of those issue are unique to programs, they are human problems as well - as it planting 'bad data', deceptions etc etc

 

Now, what  I would say, technology has enable humans who are so inclined to be even more deceptive, in much wider scope ( through social media and technology like phones) .

Also, the SPEED is the main thing, what used to happens in years takes months, months in days, and days in hours etc ...that IS due to computers - and it works AGAINST humans, who

need more time to assess information, and who get tired! and can't run 24/7.

 

To be clear, I don't like all the 'bots running either, i'm just trying to be precise about the real issues,Ultimately PEOPLE have made the decisions that lead to market declines like this, its

not an 'accident' caused by autonomous rogue programs, very far from it. 

 

 

[redfoliage2]

 

 

 

Real people don't push the market from highly positive to highly negative in one minute flat. Certain parties are deliberately throwing this market under the bus with trading programs. We had no such programs in 1918 and there was no great pandemic route. Trade programs make reaction 10 times as extreme and without any human common sense, not something we need right now.

 

Real people, if you mean retail have been small part of trading volume for many years, its not new. The 'bots (and now sophisticated anti human AI's) dominate the tape.

The move you saw before the open was just a typical bear market short covering rally on 'good news', but yes they are 'speeded' up by 'bots.  

However, it would be almost impossible to remove the 'bots now without causing a massive liquidity issue.

The phrase here is 'what goes around, comes around' - these same 'bots drove the market up for years against 'all human common sense' as well.

Exactly. 

 

 

Yep - I noticed over my 20 years experience of this market, that's trading 3 virtuous cycles, and 2 and now 3rd vicious cycles ..that during the virtuous cycle participants believe in free markets, Government handout are bad, the market is not irrational it is simply natural price discovery by very smart investors.

 

When the vicious cycle begins, everytime (2000, 2008 and now)  it flips 180 to   free markets are bad( ban shorting, close the market, 'bots are bad ), Govt handouts on massive scale are great along with infinite FED market support, the market is irrational and not natural, and worldwide conspiracy is to blame.   

 

It's the same game (2000, 2008, and 2020).  The game was controlled by the same force - on the way up and on the down.