So the other day I posted this to StockTwits and I felt like it was actually pretty cool.
That could be my bias towards loving The Matrix trilogy, but I still found it clever (pats self on back).
More importantly, it was a very quick lesson that I wanted to expand upon. It’s an important one.
— Rishesh Singh (@androsForm) May 20, 2018
The Matrix, Artificial Intelligence, and Algo Trading
In the movie, The Matrix, Keanu Reeves plays a character called Neo. I’m sure by now most of you have seen it. If you haven’t, then long story short…his character is supposed to be the savior of humanity.
The Matrix is based in the future. In this future, artificial intelligence had taken over machines and then used them to destroy and enslave most of our species.
The few human survivors of the war would go on to found “Zion” (note to self: , deep below the surface of the Earth.
The majority of the enslaved humans would be ‘farmed’ by the singular consciousness of A.I. rule. These slaves were kept in pods so they could use body heat to generate energy for the machines to power themselves.
I only elaborated that much of the A.I. war because the world of trading now contains a great deal of human vs A.I. [HFT/black boxes/etc…].
Algos and The Matrices
Thing is this…algos are fairly easy to read in terms of intraday stuff.
Watch Level 2 and you’ll have a great (or decent) idea of whats going on if you’re good with pattern recognition.
Think of each black box being run by an algorithm as being its own matrix. The battle of these algos is those matrices interacting with each other based on their rule sets.
It’s war of the machines. But I truly believe human beings are better and be better than the vast majority of algorithms. There are traders who out-perform even Rennaisance Tech.
Here’s my point.
Slow down your trading sometimes if you’re losing bigly in these high $VIX environments.
There’s a ton of noise out there (think the bullets above in the Matrix GIF). Just don’t keep up with all of it as it comes at you in an onslaught. Slow down the headlines like the bullets. Then stop and look at the material nature of the news.
Some of you newer to options or who arent hedged yet, you might want to take a break from options or rethink your strategy. Quicker exits. Take the money and run.
You can beat the algos…see below.
Wrapping It Up With More Matrix Stuff
Morpheus : The Matrix is a system, Neo. That system is our enemy.
[skips some lines]
Neo : This….this isn’t the Matrix?
Morpheus : No. It’s another program, designed to teach you one thing :
If you are not one of us, you are one of them.
Neo : What are they?
Morpheus : Sentient programs. They can move in and out of any software still hard-wired to their system. That means that anyone we haven’t unplugged is potentially an agent. Inside the Matrix, they are everyone and they are no one. We have survived by hiding from them…and by running from them. But they are the gatekeepers. They are guarding all the doors, they are holding all the keys, which means that sooner or later…someone is going to have to fight them.
Neo : Someone?
Morpheus : I won’t lie to you, Neo. Every single man or woman who has stood their ground, everyone who has fought an agent has died. But where they have failed, you will succeed.
Neo : Why?
Morpheus : I’ve seen an agent punch through a concrete wall. Men have emptied entire clips at them and hit nothing but air. Yet their strength and their speed, are still based on a world built on rules. Because of that, they will never be as strong, or as fast, as you can be.
Neo : What are you trying to tell me? That I can…dodge bullets?
Morpheus : No, Neo. I’m trying to tell you, that when you’re ready…you won’t have to…