"...Most computer algorithms used by hedge funds to trade, mimic what human traders do, just more systematically, faster and cheaper.
For example, a human trader trying to build a position of 100,000 shares of a stock will allocate the orders among different exchanges, dark pools and other venues; feeding it in slowly enough to minimize price impact, but fast enough to get it executed before the price moves too much for unrelated reasons. Computers do the same thing, but much better.
For another example, a value investor looks for stocks with solid value selling below that value. A human reads reports, talks to management, customers and suppliers, examines industry and economic data and so on, to form an opinion. The analyst might come up with 20 good picks, and expect 16 of them to beat the market.
A value factor computer algorithm will look at far more data, but not the subjective, qualitative data from talking to management (some machine learning algorithms try to duplicate this as well, but this is not the main way computers are used for stock selection today). It might select 2,000 stocks, and hope that 1,020 of them beat the market. Although its success ratio is not as high as the best humans, the extra diversification from the larger portfolio offsets some of the difference. Then the computer is cheaper, faster, and make fewer errors; and the algorithm can be continually improved while humans tend to reach a certain level of competence and then stagnate or even decline..."
I am not convinced that this is an ethical practice at least from the retail investor's point of view but I guess it's not illegal. Afterall, apparently many financial institutions, other investment houses or even pension funds, now use these kind of market makers, using perhaps questionable practices, to help maximize their profits.
So I guess the longs here may stand dead in the water, at least for awhile, investing at a significant disadvantage. They might get lucky with an unexpected sudden upward move in their share price but they had better be in a position to get the h*ll out their holdings and in the most timely fashion.
There is also this remote hope to which some longs may cling with some eager fascination: perhaps some suitor may strike a deal and buy their company outright in some kind of favorable M&A, a takeover move of their shares.
A long shot like this can still happen, once in awhile. And even AI cannot predict this kind of move exactly but it may be able to somewhat reduce the odds in selecting a fund's best course of action in this regard. That may be a worthwhile pursuit with which to ethically use an AI formula.
Maybe it's OK that a hedge fund may be one of the active participants, in driving down the share price of Trillion Energy, as well as many other perfectly sound companies, which may actually deserve, much better treatment.
It's all good! This is an expression of the best form of capitalism, hard at work, maximizing its profit potential at the retail investor's expense.
However, this notion has a familiar ring to me. Isn't this kind of trading, the sort of mechanism that drove many disgruntled American investors, to fight back, by driving up Gamestop shares, so blindly higher!
Frustration leads to contempt! I am of the opinion that shorting stocks as an ethical consideration, would be better suited to driving down the shares of companies that truly deserve that fate. And many such companies do really exist!
They do await their fate. It always eventually comes, just like death and taxes does to human beings. Shorting those shares, just speeds up the process!
But good companies may also fail, simply because they can't get the funding that they truly deserve. A low share price keeps a lot of potential investors away. They may not be willing or able to accept the possible risk. Why is the share price so low in the first place?
Sometimes what is still legal does not always seem so fair, or does it?
Laws can be changed!
It's all a matter of personal perspective. What is yours?
All the best! Java