KH Tang's Blog: January 2013

Good day,

Let's start with some questions:

Do you play Chess? Any kind of Chess...

How long does it take to train a person to be a World Chess Champion?

Well, the answer to the latter question would not be simply a matter of time to learn. Just like if everyone were given a chance for education, and not everyone would pass the exams within a given period of time.

Now, anyone who uses computer likely has heard of the real story that the long-term world chess champion, Garry Kasparov, was beaten by Deep Blue (a chess-playing computer developed by IBM) in 1997.

And, here are some benchmark information on the Deep Blue Computer in 1997 and today's computer technology:

"In June 1997, Deep Blue was the 259th most powerful supercomputer according to the TOP500 list, achieving 11.38 GFLOPS on the High-Performance LINPACK benchmark."

http://en.wikipedia.org/wiki/Deep_Blue_%28chess_computer%29

"As of 2010[update], the fastest PC processors six-core has a theoretical peak performance of 107.55 GFLOPS (Intel Core i7 980 XE) in double precision calculations."

http://en.wikipedia.org/wiki/FLOPS

And, from the "CPU Benchmark site", I found that my current laptop (i7 3632QM) can run about 78% of the i7 980X. Which is 7 times the execution speed of the Deep Blue!!!

Now, lets look at another scenario, if everyone were to carry the same program that was in the Deep Blue on their latest notebook PC today and play chess, who would win???

If the CPU power is the same, then the outcome would be a draw over many games.

Now...
With the above metaphor, lets look into other questions:

If there is a Computer-Aided-Trading Software that can consistently beat the market, and it is made available to the general public at some extremely low cost. What would happen to the stock market? Would it bring more positive impacts or negative impact?

My guess is that the software would lost it's effectiveness in making the amount of money as when eveyone has the edge means no one has an edge.

As of today's market, over long run, more than 95% of the general public are making a lost in the market. So, if and when there is such thing available, it would benefit more than 95% of the people while disappoint the few...

So...
The next question would be: Is it possible for human being to workout such a program that can automatically adapt itself to all kind of market fluctuation and yet continue to make profits even at current environment?

For the previous chess example, it can be computerized because the chess has finite chess pieces and each chess piece has finite moves. So, even the number would ended up as an enormous huge over many steps into the future move, it can be easily handle with today's computing technology.

And, if one were to go through all the trading books and courses, he would most likely be conditioned by them to believe that success of trading is and art which consists of roughly 30% Trading system, 30% Risk/Reward Management, and 40% Psychology.

Personally, I know that anything had been logically done by a human brian, it had gone through certian processes and can be programmed into software. In order to write the software, a model of the stockmarket chess board has to be built first....

Take for example....
The following diagram shows a Stock Market Chess Model.
Note: Those item marked with "*" was posted in previous articles. (Click and Zoom In)