The Algorithmic Abyss: How AI Quant Trading Exploits Retail Emotion in a Macro-Driven Liquidation Map
๐ฅ Analyzing the recent shift in the VIX term structure alongside the Bank of Korea’s latest Financial Stability Report reveals a brutal truth: the market is no longer a battlefield of fundamentals, but a programmed execution ground for AI-driven liquidation algorithms. The map of long and short squeezes is being drawn not by human sentiment, but by cold, recursive code designed to strip retail traders of their capital. The prevailing narrative surrounding AI quant trading is that it eliminates human emotion, thereby creating a superior, profit-only machine. This is a dangerous half-truth. While the *execution* is emotionless, the *strategy* is hyper-sensitive to the very emotional patterns it claims to ignore. Let’s look at the numbers. According to the Korea Financial Investment Association (KOFIA), retail investors accounted for over 60% of daily trading volume in the KOSPI during the 2021-2022 volatility peaks. This massive liquidity pool is the primary prey ...