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But anyhow, trading is clearly scalable. The best traders' accounts keep growing until it's them against everyone else. With this in mind, I don't understand why companies keep hiring and training new traders. Wouldn't they be better off just giving all the funds to a handful of their experienced best traders?
1. The market and edges change, often unpredictably
2. Luck and randomness obscures true winning strategies
3. Plenty of things in the market are only partly scalable; profit diminishes with size
4. A diverse range of winning strategies is more robust than a single one.
5. If in fact, if it is true that winning strategies are highly scalable, and impossible to know which one is best, the best strategy is to have lots of traders using lots of different strategies and let natural of the winners pick the best strategies.
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And besides, much of the trading volume today is performed by algorithms anyway. So between the algorithms and the best human traders, how is there any profitable room for a bunch of new traders? Why even have them? Most of them would have to be losing funds.
1. The market is moved by plenty of mechanisms not currently comprehensible to algorithmic analysis, but comprehensible to human reason
2. The algorithms and best human traders only control a fraction of the money, especially during runs; there is room for others to take the same or related strategies.
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Why even have them? Most of them would have to be losing funds.
1. Yes
2. It is more rational to be optimistic than pessimistic, particularly if a typical case is break even.