After 51 years of watching charts, what has really changed? In this reflective post, Michael Archer looks at bots, AI, vanished trading boardrooms and the discretionary trader’s place in it all.
Up at 3:30 AM
Weekdays I rise around 3:30 AM. It’s an old habit from the Hawaii years, when I had to have the doors open and the coffee brewing for the S&P day traders who began to arrive around 3:00 AM. The first to arrive was usually Akiko. She would be toting a satchel of money from her gift shops, ready to deposit in the bank on the main floor of the building.
I drink my 8 oz. of cold water and a couple of ounces of fruit juice. Then I make some green-ginger tea and have it with a slice of raisin bread with a thin coat of peanut butter. That is typically my “early breakfast.” I sit down to click through the charts and see how the FX markets did overnight. I’ve recently been researching the empiricist philosophers of the 17th and 18th centuries, viewing YouTubes in between watching the markets.
A Chart Is a Chart Is a Chart
As I browsed the charts this day, I thought, “I’ve seen all of this before!” LOL, I guess so, in 51 years! But it occurred to me that a chart is a chart is a chart, and despite the influence of bots and AI, they really don’t look any different than they did in 1975. I wager I could show 10 unlabeled charts from 1975 and 10 charts from 2025 and no one could accurately sort them.
OK, perhaps not quite true. There is a little more volatility, and trends don’t generally seem to be as easy to follow by simply raising S/L orders. Charlie’s Line techniques help a great deal in today’s markets! Bots and AI can fuel outrageous trends such as they have done in Bitcoin. But we had the runaway trend in silver in 1979, fueled by the Hunt brothers! We’re talking perhaps a 5% variance in half a century! “The markets can only go up or down,” said Charlie. Still and all, a binary process.
What Has Changed: The Loss of the Boardroom
What has changed, of course, is that we all use computers to some extent and trade online. There are no more boardroom galleries where traders sit, watch the quote board and keep up the charts. I must tell you I miss that activity, the social component. Sure, there are chat rooms and trading rooms, but to this old-timer it is simply not the same.
No more watching the Fiedelman brothers, Stu and Reef, battle it out over a potential trade. No more watching Charlie update the oversized charts at Peavey. No more hearing manager Pete Rednor yelling, “Merc! Merc!” to place an order, or complaining voraciously about a bad fill. No more reading all the newsletters at Bache or watching Charlie hold court as brokers brought over charts for him to analyze.
A 1998 Prediction
Here is something I wrote in 1998 when I presented to the Chemnitz Conference on Machine Learning:
“Computer trading will almost certainly dominate the markets at least in terms of volume of trade. Computers in the market will make false moves to deflect the ability of other computers to know what it is planning to do and how it makes its decisions…
This multi-dimensional game theory scenario … will, I predict, be the hallmark of the investment arena not long into the 21st century…
This image of the market may not be to everyone’s liking; especially old timers like this writer who fondly remembers customer boardrooms alive with the comforting din of ticker tapes and clacker boards…”
Technical Analysis and the Computer
Obviously, computers have also “revolutionized” technical analysis. I put that in quotation marks because I do not believe the ratio of winners to losers has changed much, if at all. A lot of dancing electrons and a zillion lines of code that mostly do nothing more than make money for the proprietors of systems and bots. “Just more rope to hang yourself,” as Charlie used to say.
BC (Before Charlie) I had it in my mind to construct an indicator battery with three, four or five indicators! I usually calculated them on my nifty HP-85 with the programmable sticks. Sometimes I would meet my pal Bob Rinker at the Physics Building in Boulder, and we’d use a Data General Nova to run them. It was a state-of-the-art mini-computer that I was told cost the university $70,000! We printed on an Okidata dot-matrix printer. I think it did a blazing thirty characters per second! It took so long to print, especially the graphs, that Bob and I had time to go out and have a beer! On occasion we’d come back to a paper jam. What a mess!
Bots, AI and the Zero-Sum Game
Today there are advertisements for so many bots and AI systems making big money effortlessly. Remember, the game is nearly zero-sum. If you can win so easily, where are the losers? There is also the age-old question: if it is so good, why are you sharing it with everybody for a couple hundred bucks?
“New AI” is of course the craze! I’ve offered to reboot my “Old AI” expert system to several hedge funds. There has been no interest, probably because it isn’t new enough and doesn’t have the buzz. That it was successful for several years is moot. I also notice that the age of those who handle huge sums of money has dropped dramatically. I know of 25-year-old “quants” who run hundreds of millions of dollars. They have no perspective; they are disasters waiting to happen, and several already have been, of course. I see the ads on efinancialcareers.com with qualifications of “an advanced degree in math or physics from a top school,” with no need for any market experience. The upshot, of course, is that everyone is in it for the big, quick kill, not for a comfortable life trading for 10, 20… or 50 years.
I had an acquaintance who was solicited with a “guaranteed” AI program. He emailed me and asked if I could review it. Sure. Send the track record, even if hypothetical, and let me do an ME analysis of it. I have nothing against back-testing. As I wrote in a previous 50YearTrader post (Why Systems Fail), a properly constructed back-test can actually be more reliable and indicative of real-time success than a short real-time track record! I was sent a screenshot of an MT4 program with lots and lots of colors and fancy lines. I told the fellow that wouldn’t be enough for me to review. And, of course, I didn’t think MQL4 was capable of doing real AI. But he went ahead and signed on. He lost $84k the first day…
The Last Discretionary Traders?
Am I the last of the discretionary traders, or the first of their return? (With apologies to Hugh Akston.) I do like the idea of being separated from the AI and bot fray and just analyzing the charts as I have done for half a century. There are still a few of us, but in truth we are probably a dying breed. We’re not in Kansas anymore. I doubt we are ever going back.
Good Trading!
Michael Duane Archer
Related Reading
- Inner Sanctum: Charlie Goodman’s Final Idea (3-C Principle)
- Goodman FireStarter Technique, Part 1: Short-Term Strategy
Keep Learning the Goodman Way
If this article was useful, these are the next steps:
- The Method: propagation, intersection and the 3-C Principle, drawn plate by plate.
- The Goodman Library: the books, from Goodman for Grasshoppers to The Goodman 6 & 6.
- The Trader’s Playbook: the Molokai setup in one printed, numbered volume.
- Mentoring: work one-on-one with the authors.