I first connected with Nick at Becoming Capitalist through this blog. When I read his intro, I liked the way Nick thought. He sees artificial intelligence and automated-algorithmic trading as a way to tap technology for personal financial freedom. We call that the Wealth Singularity. I’ve been reading Nick’s blog and communicating via email. I’m pretty impressed and thought you might want to see an Expert Profile on what Nick is up to and how he approaches automated trading.
What attracted you to automated or algorithmic trading? Why is this so important to you?
The attraction for me to automated trading was driven by the same desires I had getting into IT and software development. When I see a problem or a set of work, I look for ways to automate it and streamline it. And then of course I have a computer do it. This really provides endless satisfaction. Those who build or create anything understand the feeling of joy when there creation is finally complete.
For the programmer, this joy can be ongoing. Unlike a machine, once you’ve coded something it will execute perfectly again and again; never again requiring your input. I suppose the objective in trading then is for your AI to become a version of you without your bad qualities. No emotion, never tires, hungers, or needs a break, and can multi-task in ways you could only dream of.
What are the challenges of programming a trading system?
Getting the easy stuff right. Which is to say, all the non strategy stuff. In other words, if you wanted to clone your thought process on trading corn futures, you might rightly suppose creating all the logic paths and duplicating your decision making into an AI would be the hardest part. However, it’s the supporting layers that seem to give the most hangup and grief. Things like interfacing with your broker, managing exceptions, creating a “shell” for your AI to live in, dealing with data and messaging, etc.
What are the opportunities or potentials?
The opportunities are enormous. If you can succeed on getting an AI to trade for you, you can spend more time perfecting and thinking about the market. Your AI will never be finished, in so much you are in a constant state of change. Getting to a point where you can leave the day to day execution of your thoughts to a machine allows you to more quickly iterate yourself and your thoughts. If we can take anything away from the software development philosophies it would be
this thought: version two will always be better than your first attempt.
Is there any technology or theories on the horizon that you believe will revolutionize trading?
I’ll go out on a limb and suggest crowdsourcing for market movement predictions. This kind of lies outside of technology, but will most certainly require technology to implement. This is an outflow of my thoughts on analyzing people and attempting a definition of markets.
You can expect more thoughts on this in future blog postings.