/biz/ - Business & Finance

[Anonymous No.1778476]

Is it possible to write a trading algorithm that consistently beats the market?

[Anonymous No.1778479]

>>1778476

I don't think it's possible considering inflation, you're always better off investing in your labor capital.

[Anonymous No.1778481]

Yeah just make it buy low and sell high

I would do it myself but I'm to intelligent too get involved in making money

[Anonymous No.1778501]

>>1778476
some dudes won a nobel prize for writing a derivatives formula to predict future worth of call options over any given time.

http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1997/press.html

I think it was based on market rationality and subsequently failed but they made ridiculous amounts of money short term.

You could succeed where they failed.

[Anonymous No.1778520]

>>1778481
kek

[Anonymous No.1778532]

>>1778476
you're gonna get cucked, anon.

[Anonymous No.1778558]

>>1778481
>I would do it myself but I'm to intelligent too get involved in making money

fucking kek

[Anonymous No.1778599]

>>1778501
not really, they just assumed the bond price would be dependant o past returns of similar bond . Which is good in 99% cases but when black swan event happens you are left with had in the cookie jar. Besides all ivestors use black-sholes ow

[Anonymous No.1778605]

>>1778599
heh, almost got it
i just started looking into this recently, its not a forte

[Anonymous No.1778607]

>>1778479
>I don't think it's possible considering inflation,

[Anonymous No.1778608]

>>1778476
No, the market is too volatile for a predefined algo

[Anonymous No.1778611]

>>1778608
>considering inflation
>market too volatile for trading

on which planet am i? clearly it's day time usa on 4chan

[Anonymous No.1778632]

>>1778501
>I think it was based on market rationality and subsequently failed

Probably because once you share a working strategy, a lot of people start doing it, then it corrects the prices of the stocks, making the technique worthless

[Anonymous No.1778649]

>>1778632
the guy above mentioned that all investors use black sholes formula now. When I was looking into it, the mentioned the creators were competing with soros at the time and they didnt account for the global shocks (this was the 1980s?) and lost. its been a while since i had to remember sorry ahead

[Anonymous No.1778678]

>>1778649
You're talking about LTCM I think. They failed when the lost $4.6bn in less than 4 months after the 97 Asian crisis and the 98 Russian crisis. Their strategy was convergence trading (arb trading) and worked for most asset classes that were traded on multiple exchanges.
Their strategy worked but arbitrage spreads widened way farther than what they thought were possible in 1998 and they lost their ass before the spreads tightened again. All in all, they would've been fine had they not be so extremely leveraged.

[Anonymous No.1778690]

>>1778678
>1998 and they lost their ass before the spreads tightened again. All in all, they would've been fine had they not be so extremely leveraged.
but this begs the question, had they not been so leveraged, would they have earned the returns they did before the crash?
Obviously not, but this takes us into the impossible territory of guessing if it was the right strategy with their knowledge at the time- I'd say yes, but they got unlucky

[Anonymous No.1778691]

>>1778476
there's literally millions of algos on the internet by people that tried and failed

but yours will work. you are special.

[Anonymous No.1778694]

>>1778690
Fun fact: one of the founders of LTCm was John Meriwether former head of the domestic fixed income arbitrage group at (no defunct) Salomon Brothers investment bank which was the topic of Michael Lewis' "Liar's Poker".

[Anonymous No.1778698]

>>1778694
i hanv't read Liar's poker, but sounds interesating, will give it a go!

[Anonymous No.1778828]

bump

[Anonymous No.1778845]

>>1778698
Also read "When Genius Failed", it's about LTCM.

[Anonymous No.1778853]

>>1778481
/board