Michael starts an email from a listener that starts with praise, then turns around and claims that a top trend following trader has 400 employees and â€œsuper computersâ€ to carry out trades, and that is why he is so successful. Michael uses this listener as just one example of how millions think. They are confused by what a computer does, and simply donâ€™t understand what trend following is all about. The trader he refers to is on record saying that he trades off of Excel spreadsheets. For the remainder of the podcast, Michael expands on his response to the listeners email, and breaks apart algorithmic trading.
Michael next reads an excerpt from â€œIntuition Pumps and Other Tools for Thinkingâ€, by Daniel Dennett. The excerpt breaks down algorithms in depth. Michaelâ€™s point is to show that a computer doesnâ€™t make a great trader, it is the algorithms programed in the computer that creates the success. Where do the algorithms come from? Humans. Trend following is all about having the brilliance to come up with a strategy, but the execution is straightforward.
In this episode of Trend Following Radio: