This post will get buried in this discussion, but I actually worked for a HFT company trying to break into all sort of algorithmic trading (and made a small fortune doing so).
The topic question is:
1. Loaded question
2. Uninformed question, look at a small subset of the electronic trading reality.
3. Overly broad: jobs are immune from AI, etc (what? depression? ancient aliens?)
So, in order:
1. Some traders will always get fired as they can't do their jobs (or are just plain unlucky in the wrong time).
2. The 'traders', or rather what people think of a 'trader' is a wrong image in what I worked with. They were people configuring algorithms, linking dependencies between tickers in various market segments, etc. These traders did some rudimentary AI guiding of a sort. They used their brains, read newspapers, tried to code engines to parse said newspapers with machine learning long before it became media catchphrase, failed (badly), configured various triggers. They weren't 'traders' in your ordinary sense of the word, but struggled to make that work. It takes a lot more in scope, than buy low sell high' to make trading work in this millennia. Several magnitudes or more work, if I'm to scope it. It's a corporate effort, not a singular one. Traders do get fired but whole corporations go under also.
3. The 'etc' part:
- AI will never advance to the level to predict the future, as it will not know the sum of human experiences driving that future. This is especially true for the financial market as it is linked with the rest of all human activities in a un-linkable fashion. I can take this as a philosophy thought experiment, or as an economy fact, or from my limited experience, but, take it as you will, AI is a 2017 buzzword to come. Take it with a grain of 100 shares worth of salt.
- There is a very finite liquidity in the market, compared to the money available. When you have to iceberg orders to not destroy a trading strategy and move the gap for everybody, it's really obvious that the money you can make are limited. This was true in 2010, when most of the major banks decided to also enter, and is more true today. So, connected with the previous point. AI will never be fast enough, to earn on the limited liquidity compared to available players, considering we are capping off in silicon CPU processing power right now. I'm open to arguing this point, as it was argued to death among friends in the last decade, but I don't see this moving in any direction unless processing power moves off silicon, and even then, for a while. You can't scale atoms, and you still need 80 of them (or whatever is the latest) for building anything, so that's the hard wall. [extra thoughts]
Given all of the above, humans have an edge, and humans with experience, have a sharper edge than the AI. In trading, nothing will change, and AI wont replace traders. We can argue this point, feel free to reply.
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[extra thoughts] Purely my take on this, as future trends:
Javascript as popular web language will get capped off on performance soon (few years?). Thus, as demand increases one of these will happen (or all three of them):
- Javascript will get threads, locks, and the rest of the circus and Javascript programmers will have to learn a lot more on top of what they know (in a language not quite friendly for writing threaded code in the first place) and it will be super fun to be one for a while.
- A new language will emerge to replace the web languages and get more performance by simplifying the interaction with he browsers (Think CICS + IBM + inline assembly there)
- The JavaScript+Browser Layers+OS+VM approach will get replaced with something more lean in the next 5-10 years because people will want more (whatever more is, nobody predicted it 100% so far).
Anyways, this post got unintentionally too long, I guess I had something to say on the subject :)
The topic question is:
1. Loaded question
2. Uninformed question, look at a small subset of the electronic trading reality.
3. Overly broad: jobs are immune from AI, etc (what? depression? ancient aliens?)
So, in order:
1. Some traders will always get fired as they can't do their jobs (or are just plain unlucky in the wrong time).
2. The 'traders', or rather what people think of a 'trader' is a wrong image in what I worked with. They were people configuring algorithms, linking dependencies between tickers in various market segments, etc. These traders did some rudimentary AI guiding of a sort. They used their brains, read newspapers, tried to code engines to parse said newspapers with machine learning long before it became media catchphrase, failed (badly), configured various triggers. They weren't 'traders' in your ordinary sense of the word, but struggled to make that work. It takes a lot more in scope, than buy low sell high' to make trading work in this millennia. Several magnitudes or more work, if I'm to scope it. It's a corporate effort, not a singular one. Traders do get fired but whole corporations go under also.
3. The 'etc' part:
- AI will never advance to the level to predict the future, as it will not know the sum of human experiences driving that future. This is especially true for the financial market as it is linked with the rest of all human activities in a un-linkable fashion. I can take this as a philosophy thought experiment, or as an economy fact, or from my limited experience, but, take it as you will, AI is a 2017 buzzword to come. Take it with a grain of 100 shares worth of salt.
- There is a very finite liquidity in the market, compared to the money available. When you have to iceberg orders to not destroy a trading strategy and move the gap for everybody, it's really obvious that the money you can make are limited. This was true in 2010, when most of the major banks decided to also enter, and is more true today. So, connected with the previous point. AI will never be fast enough, to earn on the limited liquidity compared to available players, considering we are capping off in silicon CPU processing power right now. I'm open to arguing this point, as it was argued to death among friends in the last decade, but I don't see this moving in any direction unless processing power moves off silicon, and even then, for a while. You can't scale atoms, and you still need 80 of them (or whatever is the latest) for building anything, so that's the hard wall. [extra thoughts] Given all of the above, humans have an edge, and humans with experience, have a sharper edge than the AI. In trading, nothing will change, and AI wont replace traders. We can argue this point, feel free to reply.
---
[extra thoughts] Purely my take on this, as future trends:
Javascript as popular web language will get capped off on performance soon (few years?). Thus, as demand increases one of these will happen (or all three of them):
- Javascript will get threads, locks, and the rest of the circus and Javascript programmers will have to learn a lot more on top of what they know (in a language not quite friendly for writing threaded code in the first place) and it will be super fun to be one for a while.
- A new language will emerge to replace the web languages and get more performance by simplifying the interaction with he browsers (Think CICS + IBM + inline assembly there)
- The JavaScript+Browser Layers+OS+VM approach will get replaced with something more lean in the next 5-10 years because people will want more (whatever more is, nobody predicted it 100% so far).
Anyways, this post got unintentionally too long, I guess I had something to say on the subject :)