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Device Protects Day Traders From Emotional Trading
Philips Electronics, a Netherlands-based company, has come up with a device designed to protect day traders from emotionally based trading decisions. The Rationalizer measures your galvanic skin response and lets you know when you are under stress. An online trader can then take a "time-out, wind down and re-consider their actions," according to the company. This may have come too late for us, but at least future generations won't have to live through the horror of angry day trading.
Now all day traders will be making rational, informed decisions instead.
If every /. poster had to use one, life would be much duller :-)
If I had an Ass, I'd call it Fanny Bottom, then I could slap my Ass; Fanny Bottom, on the Arse.
. . . and trust me, giving them a device that will tell them when they are stressed is about as useful as taping a stethoscope to their chest so they can check whether their heart is beating.
Day traders are *always* stressed. Always.
I was stressed out about how I needed to make this trade RFN so I could retire to a small island nation - MY OWN!
Stupid galvanic response thingie made me wait until after the bubble burst.
"This post contains words, known to the State of California to cause thought. Wash brain thoroughly after reading."
"Look Dave, I can see you're really upset about this. I honestly think you ought to sit down calmly, take a stress pill, and think things over. "
This is something new from Google Labs, right?
#DeleteChrome
I bought 1700 shares of BOA at $3 when I was really, really drunk.
My wife and I were watching an episode of House recently where a billionaire dumped his stock in his company because he thought the karma would save his kid's life. I don't think any device would make a man with that level of conviction change his mind, though I imagine it might help prevent the last-minute-auction syndrome you tend to see on Ebay where a bidder ups a bid past the Buy-it-now price of the same item from another seller. It's irrational, but it happens all the time.
-l
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...No day trader will buy it - stress is part of the job.
But imagine if they did...
"I'M SORRY, YOU CANNOT TRADE RIGHT NOW - YOU APPEAR TOO STRESSED TO MAKE REASONABLE DECISIONS."
"But the market is crashing! I can make a killing if I can just change my trading positions!"
"I'M SORRY YOU CANNOT just change my trading positions! BUT YOU APPEAR TOO STRESSED TO MAKE REASONABLE DECISIONS."
"@$%^!@*!!"
Device Defenestration Ensues. Innocent passers-by injured or killed. Lawsuit / criminal sanctions may apply.
I can just imagine if this is used for drivers. You get stressed by the heavy traffic, or the twit who blocks you when you try to merge, and the car suddenly pulls itself off the road and won't start again until you calm down.
Just because you are paranoid does not mean that no-one is out to get you.
Dunno why they'd have to invent something to do this: it's been known for almost 200 years. Build a Wheatstone Bridge with your body as one of the four legs of the bridge, and measure across the middle. I was building these when I was 10. Add a transistor to drive a meter and you have most of a Scientologist's E-meter. Use this as the input to an analog input channel of an Arduino and interface it via RS232 or USB to your computer and you can easily write something to automatically log you out of e-trade or whatever. I'm not really sure where the innovation is here, although Philips usually comes up with great ideas. I guess you could use a sparkfun xbee unit to make it wireless, since anything that contains the word "wireless" seems to be patentable these days, but that just makes me even more irritated.
Nostalgia's not what it used to be.
This sounds like it could be equally as useful to an online poker player (I know many). All it would take is some marketing to the poker community.
I'm wondering how day trading, as an activity, benefits society. Sure, if done right, it can benefit the individual, but what use is it to the average person? It seems to promote the tragedy of the privates. That is, privately owned resources will be used unsustainably and depleted because the owner can simply take the profits and reinvest them into rapidly depleting some other resource. Communally managed resources will be used sustainably because no one person can abscond with the profits and reinvest them in some other resource depletion scheme. Day trading seems the perfect example of this. Day traders have no connection with the companies they trade in, no commitment to them, no stake in them at all.
With other industries, one can easily see how they benefit society, yet day trading seems to provide no benefit. Maybe someone who understands the function of day trading better than I do can explain what purpose it serves besides making a few individuals rich at the expense of everyone else. Day trading seems more like gambling than responsible ownership. Doesn't it create an unacceptable moral hazard?
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
Maybe someone can help me understand this differently, but I can't think of a more worthless contribution to society than a day trader. Are they contributing anything whatsoever to society by their actions? Just shifting money back and forth trying to make a profit? Hell someone playing WoW all day is less worthless. Can someone tell me what purpose they serve? How about giving the money to the people that actually create things or provide services?
"Users wear a device called the EmoBracelet that senses stress and makes an accompanying lighted bowl, or EmoBowl, change color and flicker from yellow to red as emotions become more intense." Something makes me think this is being targetted towards a younger market.
...if you ask me.
I mean...isn't that the main function of a lie detector?..more or less...
I wouldn't like to be wearing that thing on my wrist while talking to my boss or a customer...
Why stop with day traders? Wouldn't it be fascinating to know the measured stress profile of a given workplace before accepting their job offer?
org.slashdot.post.SignatureNotFoundException: ewg
So someone has invented an OFF switch for their computers?
http://alternatives.rzero.com/
I'm a trader by profession (although not a day trader) and making emotional decisions is about the worst thing you can do. The only worse thing is NOT making a call because you happen to be excited.
It's a learned behaviour, but a trader needs to be able to abstract away from the trade. You almost need to pretend that somebody else is doing the trade and you're just watching. I think any trader who stays in the job learns this skill eventually. The first time I traded a few million dollars of risk, I was down to few last red cells in my adrenaline stream. If I kept going that way, I'd be either an unemployed or an alcoholic (or most likely both). Instead I learned not to take it too personally. Now a large trade barely increases my pulse.
I don't think a device can replace this behaviour. In a fast market my heart may be way up due to working on several things at once and trying to keep up with the information. I still need to make trades, I just need to stay rational. A glorified heart rate monitor won't help with this.
Is this a quasi-legitimate use of an E-meter? I hope the Church of Scientology doesn't get wind of this, we all know how litigious they are.
Actually, while they are not producing any goods in the traditional sense, they increase the liquidy of the market. The more more liquid it is the better is is for pretty much anyone, or so economists say. So they do produce a useful service of sorts.
But yeah, I see your point, they do seem like pointless generally parasites that just try to make money off the inherent noise in the system. Personally, I think that it sounds like a really risky form of investing with a fairly low payout for the amount of time, effort, and risk involved. But each to his own, and a fool and his money...
HA! I just wasted some of your bandwidth with a frivolous sig!
Yet another gimmicky use of galvanic skin response. You might as well be required to undergo Scientology auditing before trading stocks, since the E-meter measures the exact same thing.
... a device to keep me from getting too drunk while playing blackjack?
Alternating between euphoric mania and dark sullen rage is the whole point of day trading. If you're sitting there clicking buttons like a robot, you're totally missing out on the fun part.
"You seem to be under stress. Are you sure you want to reboot Windows?"
The danger of any such device is the assumption that the measured response is inappropriate. Stress responses are generally more useful than not.
If applied to a vehicle driver, as suggested in a comment above, the results could be disastrous.
I believe more than galvanic skin response would be necessary to construct devices of sufficient sophistication to distinguish inappropriate human emotional reactions from valid reactions to stressful situations. I imagine that heart rate, respiration and facial expression analysis would be required at a minimum. If it is even possible.
As for the day trader, perhaps he is breaking a sweat for good reason?
Any more, investing is more about sensing the collective mood of Wall Street than it is about evaluating the viability of an enterprise. If those mood sensing devices were networked and one could hack into them to judge the mass psychology of the street it would be a very powerful investment device.
Don't Scientologist measure galvanic skin response to help you get "Cleared"? Maybe traders are some new type of Thetans.
Sell! Fucking idiot machine. I'm not stressed, I just have a fucking cold. Oh look the stock is tanking. I was right. Better get out quick. Sell! What do you mean I'm stressed?! I'm not fucking stressed. It's time to get out. Sell! Sell! Sell! Fuck now it's REALLY tanking. Okay now I'm getting stressed for real. Stock is hitting the floor and this is going to wipe me out. Sell now you fucking piece of shit machine! Sell!!!!!! Ah fuck, I'm about to lose my shirt here! Sell!!!!! Anyone want to buy a fucking useless money losing piece of shit machine???
These posts express my own personal views, not those of my employer
sez "Much fear I sense in you. This trade I cannot allow you to execute."
I guess it's better than the Admiral Akbar model of trading.
Welcome to the Panopticon. Used to be a prison, now it's your home.
Tradestation is an automated trading platform where you program in routines that monitor the market in some near-real-time fashion and they make the decisions on when to buy or sell for you.
:)
If you are an avid geek, up to learning a new programming language, and have some statistical analysis background, then this platform might be a good option. The goal is that you program your routines during relaxed off trading hours, back-test them against historical market data, and then once satisfied let them go to make all of the emotion-free decisions for you.
I personally don't know that I have the skill needed to protect my fortunes from what amounts to a complicated shell script but for others I'm sure it works fine, or at very least provides the allure of finding the "secret" algorithm to make millions.
I dunno about the implied use for the device, but I could see this as a very interesting device to measure mob responses. Put these on quite a few people who are trading and compare them to the flows in the market. I wonder what sort of correlations would pop up.
By the time the situation has escalated to such a degree that you're becoming emotional, isn't it already too late to fix the problem?
"In prison you just have to shut your eyes and take it. Here you have to shut your eyes and give it."
Thanks for the informative answers, that makes a little more sense to me now. It's amazing our economic system works at all. Of course, it also can fail spectacularly as we've all seen. I've never understood the people that think a bunch of unregulated greedy jackasses all trying to make a buck will somehow magically make a fair and sustainable society and economy.
I used to day trade. I don't remember a time when I wasn't stressed during trading hours. When you day trade, you always are under some stress, even if it's the euforia of just making 10% in 5 minutes (which would likely trigger the stress indicator as it is an intense emotional response). I got out of day trading having made money overall, but thinking I will never do it again - way too stressful.
You've just illustrated the Parable of the Broken Window.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
They finally found the solution to the problem of mad traders: some form of electric chair!
helps control automated selloff scripts triggered at certain levels just as much as it helps automated buy scripts.
Good people go to bed earlier.
I thought the apex of this sort of technology was the mood ring.
i thought this stuff was handled by very fast computers looking for very small movements in very large data sets these days...
like say whats described here: http://arstechnica.com/tech-policy/news/2009/07/-it-sounds-like-something.ars
comment first, facts later. http://chem.tufts.edu/AnswersInScience/RelativityofWrong.htm
Stock shares are claims on the company's profits. When you buy a stock you're buying a share of the company's profits, to be distributed at some unspecified (and possibly empty!) set of dates in the future, in unspecified amounts. Shares are worth something, even if only a little, as long as there is a non-zero probability that the company will pay out profits at some point in the future. That's really all that needs to be understood.
The only difference between initial investors and future investors is that the initial investors buy their share of the company's profits from the company itself, which then uses that money to finance its operations. People who buy from the initial investors are simply buying the right to get paid by the company in the future, which, again, is worth something as long as the company's hopes of turning a profit in the future do not completely vanish.
Are you adequate?
Nope. The strongest statement you can make there is that if day traders as a group make a profit in the aggregate that also beats the market (and in a risk adjusted fashion, to boot), then their behavior is providing a benefit to society. If day trading is a zero-sum game relative to the market as a whole, so that one can obtain a return just as good with buy-and-hold, then they're just gambling.
Are you adequate?
I wonder if it would be allowed to use this in a chess tournament.
Slashdot requires you to wait longer between hitting 'reply' and submitting a comment.
This would be great for internet poker!
Dividends, which is what you are talking about, have not been paid in years. All a stock is today is a percentage of the company, for instance if there are 500m shares of Microsoft and you own a share, you own 1/500,000,000 of Microsoft.
Don't get me wrong, it would be better if it were the way you describe it, the way it was. The dissociation of dividends from share value is in my opinion everything that is wrong with the markets today. It used to be that steady, reliable profits, year after year, providing dividends to the shareholders was enough.
Without dividends, all that is of interest to investors is the stock price increasing, and for that to happen, the company must report increases and logarithmic growth year after year, which is unsustainable in the long or even medium term. These days, half of the stock profits taken by investors of a company's entire lifespan, if any, are received in the IPO stage, at the very beginning. Stock trading is gambling, nothing more.
That doesn't really matter. The reason dividends aren't paid is because we have stock market that's liquid and efficient enough that stockholders can substitute capital gains for dividends. If the stock market was illiquid or inefficient, then the only way the stockholders could cash out the company's profits would be paying out dividends--and then dividends would be paid out.
You mean exponential growth, not logarithmic. You're making this more complicated than it needs to be; whether the growth is logarithmic or exponential is only a detail.
Basically, the only profit you can expect over the long term from a stock investment is whatever the long-term profit of the corporation turns out to be. No matter what numbers the company reports over the next few quarters, in the end, whether the corporation turns out to be a profitable venture will become evident over the long term. The management of an unprofitable corporation may try to disguise this over the short or medium terms, but they won't be able to do so forever. No matter how they behave over the short term, overvalued stocks will drop over the long term, and undervalued ones will rise.
This is one of the reasons why the stock market is volatile in the short and medium term, but shows a definite long-term trend--because which of today's companies will turn out to be the ones that actually turn a profit over the next 20 years is very hard to predict, if at all possible.
Are you adequate?
i am a full time retail trader.
i trade from a bedroom trading room.
one of my trading buddies went from $50,000 to $6,000,000 from a bedroom trading room using his head. doing his own thinking.
this year i have had a trade that was up 6000%. i took half out at 3000% and the other at 2000%. bp option went from $0.07 to over $4.00 on a 1000 shares. monday i cover cern. $0.10 to $1.40. 1300%. ntes. 300%. a day ago.
you need a complete trading plan to continuously make more money than you lose.
that is what losing traders do not have.
traders make money and stimulate the economy. some of us make a lot of donations.
i am working on a phd in advanced input devices.
currently i have a patent pending on one of my advanced input devices. an integrated keyboard/mouse. i use it everyday to trade.
my trading pays for my research and patent fees among other things.
i put all my trades up on twitter in real time.
i am trying to show people that all you need to make money trading is a trading account.
everything else is free from the library or the internet.
there is no secret sauce to making money trading.
the thing between a trader's ears is all one needs to make money.
twittering as stocktradr
Boss (looking at Rationalizer): "What? You're not stressed? I am obviously not pushing you hard enough."
Naaa. No way this thing could be abused. Impossible.
I am anarch of all I survey.
twittering as stocktradr
so that's where
you picked up that
annoying habit
A fool that bets his own money on the stock market ..
* Govt must regulate the market capitalization to 2 times their quarterly revenue OR
* Regulate every trade as http://www.sec.gov/answers/insider.htm
Slashdot = Sarcasm
Wonder if this thing could be adapted to drivers? "Sorry, but you're too stressed to drive...initiating vehicle shutdown in 30 seconds"
Seriously though, I've read through all the +3 posts, and all I see is a bunch of arguing about the legitamacy of day trading. Come on, this is supposed to be News for Nerds...is the device cool, or is it crap?
Just another day in Paradise
"Moral Hazard" is a very specific perverse incentive, I think there's a different one at play when it comes to day traders. I can't think of a specific term to describe it, other than it's sort of a ruleset for a grand game of "chicken", where everyone is rushing towards an unknown doom point. Those who bail early win the least, those who hold out the longest come closest to catastrophe, but also have the potential to win the biggest payoffs.
So, these people are merely doing their best to run up a hill of ascending prices in the midst of a stampede. There's a cliff at the top of this hill, which they know full well is ahead of them because they're reasonably (if not fully) aware that the value is inflated and as soon as enough investors pull-out of the stampede, the cliff will suddenly appear. Being in the stampede, they can't tell where exactly the cliff is, they're just trying to stay in it until the last possible minute at which point they hope to jump out of the stampede themselves and enjoy their position up on the hill, while watching everyone else tumble off the cliff as they look down on the poor suckers who didn't have the fortitude to earn the big payoff. The realistic value of a commodity or stock is not only not their primary concern, it's the exact thing they're working against. They are uninformed speculators whose behavior amplifies both mania & hysteria and causes wild market swings that can have rather profound impacts on the economy. They're the strongest destabilizing force the market knows.
On the other hand, responsible, knowledgeable brokers make their trades on what they believe, in their educated opinions, to be the true value of a stock. They're usually looking to build a sustainable, profitable portfolio, not to achieve a quick short-term, high-risk gain. They of course will take advantage of the price slumps that the day trading speculators cause, and sometimes the inflated prices as well, but they are a stabilizing force who do a bit better at making rational decisions and stabilizing the market.
yeah I'm actually developing the opposite. It's a device that detects when a company switches from Redhat to Microsoft servers and automatically dumps their stocks :-P
Google's Super Secret Search Algorithm: SELECT @search_results FROM internet WHERE @search_results = 'good'
Day trading is pretty much like gambling at the casino.
Over the course of time in which a day trader trades, the gyrations of the overall market, and individual stocks, is essentially noise, and overwhelms the long-term historical trend of stocks to go up in value (and, frankly, you need to have decades-long horizons to be sure that that trend will overwhelm the noise).
And every time you make a trade, your broker takes a trading commission.
You're left with a negative-expectation gambling game.
I know, I know, you've got a brilliant strategy which means you'll outperform the market, transforming the game into a positive-expectation one. Might I suggest that a) you might have just gotten lucky, and b) sooner or later enough traders will figure out your winning strategy, copy it, and you're back to square one.
As for the device, it's crap. Galvanic skin response is ancient technology, and, as others have noted, short-term traders are always stressed, so they'll be setting off the meter, oh, 95% of their "working" day.
If you're into day trading, get a job at a merchant bank or a brokerage firm. At least that way you get to gamble with other people's money, not your own. You'll still underperform the market (it's the dirty little secret of managed investment funds, they almost always do), but it's not your problem any more.
Any sufficiently advanced technology is indistinguishable from a rigged demo
--Andy Finkel (J. Klass?)