So, here's my first blog post.
You will notice my 0 caps points. This is largely because I'm just getting started with investing and my abilities as an investor aren't worth anything. Not only that but I realize what I'm doing isn't investing, it's speculation. Yeah, I can hear the keyboard clicks of the flames being prepared in my head as we speak. Expect to hear a few other MotleyFool taboo words.
I've had this idea in my head for years. Write a program that does automated trading. I'm a programmer. So I've got that part of the equation solved. And while I realize this sounds an awful lot like a get rich quick scheme, I have a lot of free time on my hands and even if it doesn't work the skills I build are going to look great on a resume. It might even be a good jumping off point for other people who want to try this same thing.
Even if this doesn't work, it's not going to be a wasted effort.
At some point in their lives, many people consider a real world farm bot. Now for those of you who don't play computer games (excuse me a moment, the idea that someone out there isn't playing computer games makes me kind of depressed), a farm bot is a term that applies mostly to MMORPGs. Botting is something that can be done in a lot of games, but really when people think of farm bots, it's from something like World of Warcraft.
The premise is that you run a program so you've got a character going out there doing activities that generate gold. Maybe you're making items. Maybe you're viciously slaughtering monsters. Maybe you've come full circle and you're speculating on in game items at the auction house. The point is you're collecting something valuable, and you aren't playing the game.
As an aside these are generally loathed. In many of these games you have a phenomenom where people will sell things they've collecting in game for real money. Quick google tells me I can get 10000 gold on the Aegwynn server for $30.92 US. I don't play on Aegwynn, I'm Canadian, and I'm not even sure if that's a good price or not. I don't play on World of Warcarft. This entire paragraph is a non sequitur. Ha. Take that reader!
I think this has passed the point of being a get rich quick scheme, because it involves deep thought and technical ability. It's now just a scheme. Card counting can be effective. I saw this one TV show about people who made a machine that could predict roulette results! The former ended reasonably well for it's users, the latter did not. (Let that be a lesson. Don't mess with Vegas!)
The big Wall Street Banks run Artificial Intelligences that are used to trade stocks. Which aren't enough to make their equity departments profitable if you believe them. And as a misanthropic cynic I can believe it. I'm not too keen on the level of thinking that goes on at the average Wall Street bank. Now if you tell me that there's no hedge funds that can't make a profit with AIs, then I might give up all hope.
But probably not because I think it's kind of a neat idea. Might be able to get a University to pay for my tuitition with it if I do this right.
It's still in the really early stages. Which it's been at for years. But to be fair I didn't know where I could get information to start testing ideas. The whole reason I joined Motley Fool to begin with, was so I could ask if anyone knew where I could download share price histories.
... Which I still haven't done. Got some issues with procrastination. That's really the biggest reason why this is doomed. But in theory a few line changes and I could get the entire history of every stock on yahoo. We have limited bandwith so I'm a bit hesitant though. And I want to put in a bit more control.
Now some of you might be thinking, "Wow this is awesome. I hope he gives me his program!" And to you I say that's pretty unlikely. If for no other reason than I don't want to get hanged after the next market crash. I might have programmed it wrong. People might use it wrong and I get blamed for their mistakes. I'm prepared to face the consequences of my own poor decisions. But not the worlds. It never ends well for people who decide to shoulder the worlds burdens. I'm nice but I'm not that nice.
A program that gives you a database and you can perform vast complex computations on is certainly useful too. Unfortunately what I would end up creating would require one to know Java, PostgreSQL (every database is a little different. Even the SQL ones), and investing. That's pretty narrow use.
A database of the entire history of the stock market would be of some value. Even if it's Yahoo's totally innacurate data. It's a good starting point. But I don't think they'd much appreciate ten thousand people all downloading it. And if they wouldn't appreciate it there's no way I can offer it to others either.
So I doubt this is going to be very helpful.
Now I'm probably going to finish this off to the level where I can start doing computations on the database. If I don't totally flake out which is quite possible, I'll be doing some Technical Analysis. More to the point, I'm thinking I can do some pretty exhaustive investigating. Or more to the point, we can do some exhaustive testing.
Figure the Motley Fool community, and maybe a few others can come in here and we can investigate this scientifically. Create a controlled experiment. And not cherry pick data. But at the same time leave people room to adjust strategies that are not working.
No point sweating the details now since it might not happen, but the possibility has me pretty excited. [more]