“Fear is a mind killer”. Many experienced traders bemoan very bad decisions that they made at one time or another based on emotions. The psychology of behavioral finance teaches that there are many common human emotions and responses which are detrimental to trading success. People hate to take a loss or admit a mistake and sometimes stay in positions too long. An algorithmic system will carry no such emotional baggage and execute based on the numbers. Fact-based, numerically sound and non-emotional execution are among the principal advantages of systematic trading with artificial intelligence.
Artificial Intelligence based systems eliminate human emotion and may help enhance trading, however some are concerned that it is a two-sided coin; it will eliminate the human “gut” instinct factor as well. Some still believe that a human may see or feel something coming that a computer would not. In so far as emotional human input can be a positive, we believe it is best applied in selecting non-systemic CTAs with audited performance results or in risk sensitive self-directed trading. The human input can also be easily applied by promptly discontinuing a system and shifting to the sidelines, or moving to a different strategy that one believes will outperform in the future.
In our opinion, our long term experience (22 + years) has shown that second-guessing emotions with hindsight and gut instinct impulses are much more stressful for traders, often detracting from the customer experience. Deciding how to participate in the markets is not just a performance evaluation, it is a quality of life choice that can severely impact (for better or worse) an individual’s peace of mind.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by Time Leverage Capital Corporation who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Time Leverage Capital Corporation does not maintain a research department as defined in CFTC Rule 1.71. Time Leverage Capital Corporation, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. Time Leverage Capital Corporation is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Time Leverage Capital Corporation does not guarantee or verify any performance claims made by such systems or service.