Computer trading has become the largest part of our market’s volume threatening the profitability of many discretionary traders. Many traders/investors fear the bots. We shouldn’t. We should embrace their underlying technology and use it to help us find more of our favorite trading patterns. And even turn quant.

Adding support to my thesis above was a recent blog post at The Big Think in which humans were noted for their amazing pattern recognition skills:

Not only are machines rapidly catching up to – and exceeding – humans in terms of raw computing power, they are also starting to do things that we used to consider inherently human. They can feel emotions like regret. They can daydream. So what is – exactly – that humans still do better than machines?

Quite simply, humans are amazing pattern-recognition machines. They have the ability to recognize many different types of patterns – and then transform these “recursive probabalistic fractals” into concrete, actionable steps. If you’ve ever watched a toddler learn words and concepts, you can almost see the brain neurons firing as the small child starts to recognize patterns for differentiating between objects. Intelligence, then, is really just a matter of being able to store more patterns than anyone else. Once IBM could build machines that could recognize as many chessboard patterns as a chess grandmaster, the machines became “smarter” than humans.

Using advances in computer processing for our trading is the future. In my new book, The PlayBook, I define the future of trading: the multi-market, multi-product discretionary quant trader. In short, traders must build a PlayBook of their favorite patterns, use technology so they do not miss these patterns (custom trade filters with the help of quants), learn to express these patterns in different markets and products, and design auto trading strategies (software now exists for most to build them).

Advanced computing power allows discretionary traders to find more of their A+ patterns. Embrace the future of trading, diversify your trading revenue, and leap forward with your trading progress.

You can be better tomorrow than you are today!

Mike Bellafiore

One Good Trade

The PlayBook

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