Through our work on the OptionsHouse API
client,
we’ve somehow become known as trading algorithm experts. At least once a
week, Branded Crate gets a phone call or email from someone who wants to
automate trading activity. To even have a thought like this requires
some level of sophistication. Even so, many potential clients aren’t
aware of what it takes to create and manage a system like this. That’s
our area of expertise, so if you’re considering trading automation, read
on to learn more about how we do it.
The very heart of any trading algorithm is the actual algorithm, written
using instructions a machine can understand (code). This is mainly what
clients think about when they talk to us. The idea generally seems
simple at first, but complexities emerge as you begin to consider
automation. Without even thinking, clients “just know” to do things a
certain way as they execute their trading strategies manually.
Computers, on the other hand, don’t know anything.
Let’s say a client wants to buy N shares of some stock when the current
price of that stock is lower than it was at the same time on the
previous trading day and sell when the current stock price is higher
than the same time on the previous trading day. This is probably a
terrible strategy, but ignore that because it can still serve as an
example of how and where complexities emerge.
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Our newsroom
‘guild’ votes
Tuesday
on whether or not they will allow wage cuts for guild members. The
proposed wage cuts would be 0-6%, applied progressively based on annual
salary. There are a number of other
concessions the company is asking
for as well. Basically, if we make those concessions, the company will
only lay off 16 full time guild employees rather than 21. There are no
assurances that the company won’t just lay off more people later anyway.
In fact, I think there’s a good possibility it will.
This used to be a great company to work for, then we saw the cost of
benefits skyrocket, followed by buyouts, more buyouts, layoffs and a
wage freeze, followed by suspension of 401k matching and the pension
plan. Now there are more layoffs coming and possibly even wage cuts
along with a host of random concessions.
We rode that bubble hard and forgot to diversify, in fact we did just
the opposite. Right before the bubble began to burst we doubled down on
our bet that newspapers would never fail. We increased our exposure to
an already enormous risk at what
could be the absolute worst possible time in history. Just as bad, we
used debt to finance our added risk. Worst of all, we continue to
actively shift blame to the poor economy rather than take responsibility
and come up with a plan for success.
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How
much do you like your favorite carbonated soft drink? Are you spending
about $20 per month on soda? Lets see what would happen if you chose to
invest that money in a regular annuity earning 11.6% interested (this
historic return of the S&P 500 since its inception in 1926). I’ll assume
that a daily soda habit costs $20 per month or $240 per year. Lets
start with an 18 year old person who has chosen to place her soda money
into an annuity every month. Forty years later, her annuity will be
worth $497,922.
That number (in 40 years from now dollars) isn’t easily comparable to
current dollars. I’ll use the consumer price index for the last 40 years
(January 1968 to January 2008) to adjust this number to something that’s
hopefully closer to real dollars.
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