Most Retail Traders Think the Algorithms Are Working Against Them.

Here is something I know from +20 years building trading tools.

Most retail traders feel like the algorithms have an unfair edge. They are not wrong. Institutional algorithms see patterns faster, execute faster, and move size that individual traders cannot match.

But here is what Jeff Bierman told me that changed how I think about this.

Jeff spent 8 years building the charting and scanning infrastructure inside ThinkOrSwim. 

He watched, from the inside, how algorithmic systems are programmed to respond to specific price patterns.

Not general patterns. Specific configurations of price, momentum, and money flow that trigger automatic responses.

What he observed is this. When a stock forms the specific structural signals that experienced technical analysts look for, the algorithms see it at the same time.

They are programmed to recognize the same thing. 

When they pile in simultaneously, the move accelerates faster than it would have in any previous era of markets.

The Burn Signal is built around four criteria. 

When those criteria align, it is not just Jeff noticing. It is the same conditions that institutional algorithms are programmed to respond to.

You are not fighting the algorithms. You are reading the same setup they are about to act on.

That is a different relationship with the market than most retail traders have. 

They are reacting to moves the algorithms already made. Jeff is identifying the conditions the algorithms are about to respond to.

I can try my best to explain to you why that is, but Jeff does it way better than me. 

In this video, he explains that relationship. He also shares examples from his own trading on how and why it works. 

Even if this isn’t your style of trading it’s worth watching because like it or not…algorithms run the show in the market. 

My favorite part of the video is the section on how the algorithm response accelerates a move. 

Look, the Straight of Hormuz is closed again. We have a massive round of earnings next week. This fairy tale ride we’ve had in the market won’t last forever. 

If you want to take advantage of what happens next, it pays to know how the algorithm works.

To your success,

Don Kaufman