Unnaturally Long Attention Span

On Stock Trading

I’ve made quite a bit of money this past week trading stocks in my Roth IRA. Here’s a few things that I learned, which I hope will be of use to you as well.

1. The reward function of playing the stock market game should NOT be the stock price itself. The reward function is actually SELLING stocks at a high margin over what you paid for them. So, if you are training a reinforcement learner (such as your brain or a Markov Decision Process) , no reward should be applied when the stock price increases, unless a sale is to be made.

Taking this into account, only two modes of short-term stock trading make sense to me:

1. Betting on a Bull Market
In this mode, you begin the trading near the beginning of a big event, such as the winter shopping season or the end of the fiscal year for a particular industry. You choose a basket of stocks that reflects how you predict the industry will be changed at the end of this quarter. Take all of the companies that you think will be affected positively, subtract out those which everyone else thinks will be positive (since those expectations are already reflected in the price) and buy those stocks. So for example, if you think AMD will beat out INTEL in the next batch of processor releases and it is counter to what the public believes, then buy it! Hold on to the stock until the event passes, and then sell your stock at the end of this 1-2 month period. Your gain/loss will reflect exactly how good your prediction was.

2. Interday/Week trading
The most important thing to remember is that each trade costs you $7 (with Scottrade, which is what I use), so you must try to make trades that at least cover you for the $7. This means that the trades necessarily have to be in larger volumes on stocks that have higher volitility. This translates into more risk. However, there are techniques to balance the risk by choosing a set of stocks that balance each other. Unlike the first mode, this type of trading can be done even when the market is flat, since you are just betting on the small changes that happen day-to-day. In addition to choosing stocks that move a lot from day-to-day, you want to choose stocks that have a sufficient information streams. What I mean, is that even though those penny stocks might have huge amounts of movement, if there is not much news related to that company, you don’t really have enough information to make an informed trade. So, you really want to choose companies that have a mid-size stock, information-rich news stream, and those that are not likely to go out of business the next day. For this type of trading, you want to hold onto the stock for at most just a few days.

17-Nov-2005

Posting some old pictures..



The brave man himself, don’t know why it’s cropped…

27-Sep-2005

This weekend at the Tech Museum of Innovation in San Jose ..



This pictoral evidence documents the difference between an amatuer and professional spam-wacker. Notice the inefficient bending of the body in the first one, which dissapates the energy from the central pivot. Compare this to the economical form shown in the second picture, which utilizes the dropping force to enhance agility.

Grad Student Orientation Event this Friday

Hi friends,

Sorry for the relative dearth of posts recently. There are a few reasons for this:

1. We are in scramble-to-get-it-done mode for prepping our DEMO Fall05 here at the startup. Our biz-dev guys are down in Long Beach now getting ready. Check out live video updates at http://www.demo.com/

2. I’ve been catching up with a lot of friends and family lately

3. I’ve been putting some time into my own hobbies.

Hopefully things will change soon and you will start to see more posts.

Later this week, I will be back on campus! I have been volulntering my time to help out new incoming Grad students. The department will be hosting an orientation lunch on Friday to welcome the new students. For those of you that have been busy asking me questions all summer, this is a great chance for you to network with your future peers and I highly recommend it. It’s really true that you will probably meet your best acquaintances at orientation. It’ll be nice to finally put a face to an email address and I’ll be able to give you the inside scoop on how to get RA and TAships, getting around paying tuition, finding jobs and venture capital, the local housing situation, and what are the best seafood bars in Silicon Valley.

Looking forward to meeting you all,

Now, coming to you on location from Mountain View, CA

OK, so this past weekend I finally moved out of Stanford campus into Mountain View. Thanks a lot to my girlfriend for the hard labour, I couldn’t have done it without you! Now, I’m literally a short bike ride away from work, the San Antonio shopping center, the movie theater on Shoreline and yummy ethnic foods of Cupertino. It’s a great location–I’m paying less rent and my room is now double in size, we have pool table, private gym, and garaged parking. For those of you that know the Stanford campus, it is the absolute worst place to get food after dark(or even during the day). Not the ideal environment for the hungry late night hacker. Now i’m walking distance from food 24/7…

Ahh, Missing Good Old Berkeley

A 6 year old programmer

http://davidbau.com/archives/2005/07/29/haaarg_world.html

This is a cute post about a dad teaching his son to program a game. I got started in CS by programming my own games, too. This was because, unlike the other cool kids, I didn’t have any games on my computer, since my Dad had an Apple. My first CS book was TRS80 Basic Computer Games, which I bought with a quarter while I was out yard sale shopping with my mom. This was an old book, even at that time, and it was not all that useful, since I didn’t have a Radio Shack TRS80, so I had to port the code myself. This was back in elementary school, and my Dad quickly figured out that I had an interest in this sort of stuff and got me my first compiler: MS QuickBasic for Apple. The rest, as they say, is history…

How many other coders got their start this way?

San Jose Grand Prix

I woke up at 7AM this morning, stupefied at my inability to sleep. I had been awaken, not by the humming of the quad-proc rank mounted server under my bed, nor the by the persistent sounds from the street outside, but by an algorithm. I had an idea for a new algorithm in my head that just needed to get out. It had been bothering me for days.

Maybe this is why I can’t sleep.

I take a short drive to the office. 3 hours later, I had written 20 pages of code. I grab some drinks and snacks from the break room and scan the daily newspaper. Apparently there’s some major event this weekend in downtown San Jose, so I decide to drive down and check it out. The first ever San Jose Grand Prix is Indy 500 meets street racing. They had blocked out several streets in downtown San Jose near Almaden (by the Adobe building) to form one long makeshift racetrack. I saw several Formula 1 racecars, black dudes spinning out on motorcycles, and NASCAR dads grilling burgers. As expected there were plenty of hot dogs, beer vendors, and scantily clad women. I wish Palo Alto was this cool.

Anyways, I was just there for a short while, but here are some photos other people took.

Birds mimic ringtones

German ornithologists claim that some birds are now singing the songs of cell phone ringtones. Richard Schneider of the NABU bird conservation center near Tuebingen says that jackdaws, starlings, and jays are the best mimics. Still, the birds apparently can’t copy more complex polyphonic ringtones. From Deutsche Presse-Agenture:

One reason for the phenomenon was that these birds were increasingly common in the urban environment, even the relatively shy jay, (Schneider) said. “There is food and an increasing amount of green space in modern cities.”

The birds were simply adapting to their environment in imitating human sounds in what he termed an “evolutionary playground.”
Link

Stanford Shots

Check out this great collection of Stanford Panoramas.

http://www.flickr.com/photos/madh/22775430/in/photostream/

There is a rare shot of Lake Lagunita with water!