I will be graduating from 2011 and would like to work in S&T. I wanted to know from someone who is a trader right now, what they know about S&T divisions being replaced by computers. I'm very intrested in S&T, but am curious to know if the future for jobs is grim.
thanks
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Computers will never replace traders in the foreseeable future. The best traders out there use a little bit of luck, a sprinkling of quant, and a lot of gut reaction to generate returns.
Take a look at GS's Global Alpha fund. It's basically a quant-based computer model that autonomously trades. Global Alpha was negative ~10% YTD when I checked a few months ago. GSGA was heavily invested in "neutral" strategies that included shorting the Yen (oopsy).
Computer models are great, but I don't think we're at a point where technology outweighs the experience and knowledge of a good trader.
Maybe you should check again. And since when did the strategy take positions in JPY? (or FX in general?)
They were definitely down last year. Roughly 40% down from a Bloomberg article in April of this year.
And from my knowledge, the Global Alpha fund has the free reign to trade in nearly every market.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aV51OvVaW7Z8The article mentions that GSGA placed bets on currencies. I know for a fact that they shorted JPY. Take what you will.
If so, how do you explain the return of RenTec?
Traders still are the ones that are running the programs. The problem with a lot of models is that they are reactive and not proactive. This is a tough topic to dabble, and no one knows exactly what the top quant funds like SAC, DE Shaw and Rentech are using.
I personally believe that computers will never completely replace humans in trading but there will be greater and greater automation across many different markets and product.
"Oh - the ladies ever tell you that you look like a fucking optical illusion?"
Maybe there will be money in writing a dystopian novel in which not only traders but entire investment banks are replaced by computers and machinery---a sort of hip, updated version of Player Piano.
You're graduating from 2011? Is that one of those public schools, a la "P.S. 2011"? Please follow up with me on this, as I'm very curious. Are you just really foreign?
Anyway, while I am not a trader, I think you will find my advice surprisingly valuable. Traders will tell you all kinds of great things about their profession: 1. success is based on merit, and being a good trader comes from making good decisions 2. buying at the lowest price and selling at the highest is something only a human can figure out, so your job security is intact 3. they make more than bankers
Here is the reality that those meatheads can't wrap their simplistic brains around: 1. their success is based on luck. any profits made by "gut" decisions are offset by all the money they lose using that approach. see: Brian Hunter's excellent "gut" decision making style. it's not just Brian Hunter; these guys blow up all the time and get fired. you just don't hear about it as much as you hear about that trader who took home a $100m bonus 2. a computer can easily trade, as has alraedy been explained in this thread (see: global alpha fund). this applies especially in markets where there is a lot of efficiency, low barriers to entry, and thin spreads. Which brings me to my next point: the cut a trader makes is gradually getting thinner over time, and this isn't just true in equities. it's true in everything. it may take a decade or so, and it might be pushed along by angry voters on the sidelines, but this is the natural movement of these markets toward efficiency. 3. traders do not make more than bankers. the average trader (compared to the average banker in the same age group) makes less. not only that, your earnings are all over the place. $300k one year, $90k the next. sure, some guys make seven figures, but you probably aren't going to be one of them. might as well just play the lottery if you're going by those odds.
http://www.drmarkklein.blogspot.com/
Thanks everyone, I think I got both sides of the argument there.
Dr. Klein- Your questions all come down to a typo on my part. I mean to write I will be graduating in 2011, not "from 2011". I'm not foreign either, I attend UNC Chapel Hill in the states. Just curious, in what area do you work? Any similar advice for the area of Wall Street you work in?
That "P.S. 2011" shit wasn't even very clever...
Who said it was clever? I was legitimately confused.
http://www.drmarkklein.blogspot.com/
Nice one Mark Mc Dueche. Are you on of those bankers that make 7 figures but cant make a dime in the market? No need to be bitter.
"Oh - the ladies ever tell you that you look like a fucking optical illusion?"
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