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Do we need Artifical Intelligence in trading?

  • #101
  • Dec 4, 2017 6:58am Dec 4, 2017 6:58am
Quoting jdieieh
{quote} As I mentioned, such a AI Algo still would be narrow AI. It does not need any consciousness, but it can be very very good at playing with human masses in market and extract wealth from many to benefit few. We dont need to understand how exactly it works either. As a precedence, how many people this days understand HFT collaborative effect on market risk? And even if some do, they still play it, because that what chase for higher yield dictates. It is a matter of time, with give resources, such a AI Algo will start to operate. FED+ECB working...
They have no inherent incendive at making money other that optimizing their given loss function. There is then a point on which they will for sure beat us: Instead of competing they could compute that cooperating is more efficient. And they could cooperate optimally according to their respective loss functions.
No greed. No fear. Just maths.
  • #102
  • Dec 4, 2017 6:59am Dec 4, 2017 6:59am
Quoting PipMeUp
{quote} That's the idea. The problem is that AlphaGo Zero could generate millions and millions of scenarios by playing against itself. With FX data you only have one history and no model to simulate more.
What it could do, however, is simulate market microstructure (a market with, say, a 1000 participants that broadly correspond to the "real market conditions") and learn from this.
Cheers,
k
  • #103
  • Dec 4, 2017 7:03am Dec 4, 2017 7:03am
Quoting PipMeUp
{quote} They have no inherent incendive at making money other that optimizing their given loss function. There is then a point on which they will for sure beat us: Instead of competing they could compute that cooperating is more efficient. And they could cooperate optimally according to their respective loss functions.
THEY are private corporations and the only reason THEY exist is making money. They have every incentive to make it even more efficient and such a helper would be very usefull to shake out any pig-back riders

Haven't you noticed wealth transfer in last 10-20 years, it is not an accident
  • #104
  • Dec 4, 2017 7:09am Dec 4, 2017 7:09am
Quoting kprsa
{quote} What it could do, however, is simulate market microstructure (a market with, say, a 1000 participants that broadly correspond to the "real market conditions") and learn from this. Cheers, k
As long as the algo is trained against a correct model of this "real market conditions". Otherwise they will learn to trade the model. Can be a good approximation... or not at all.
No greed. No fear. Just maths.
  • #105
  • Dec 4, 2017 7:10am Dec 4, 2017 7:10am
Quoting kprsa
{quote} What it could do, however, is simulate market microstructure (a market with, say, a 1000 participants that broadly correspond to the "real market conditions") and learn from this. Cheers, k
How about learning by entering real market with several billions and observing real market reaction. Like this little algo that was building a car. Plenty opportunities every day and real life data could be very conclusive. By increasing the size of each lesson, could start condition other participant for specific behaviour, like an proverbial frog. With time, it could create a new model of the market, the real one and know only to itself. How many generations it would take?
  • #106
  • Dec 4, 2017 7:10am Dec 4, 2017 7:10am
why not just following the trend generated by the algos.... the rest is irrelevant to us poor retailers.
  • #107
  • Dec 4, 2017 7:14am Dec 4, 2017 7:14am
Quoting jdieieh
{quote} How about learning by entering real market with several billions and observing market reaction. Plenty opportunities every day and real life data could be very conclusive. By increasing the size of each lesson, could start condition other participant for specific behaviour, like an proverbial frog. With time, it could create a new model of the market, the real one and know only to itself.
Too few data "points" for learning, I'd think.
k
  • #108
  • Dec 4, 2017 7:15am Dec 4, 2017 7:15am
Quoting jdieieh
THEY are private corporations and the only reason THEY exist is making money.
But THEY won't decide what solution THEIR algo will come up with. Nothing prevents the algo to work together. They have no NDA signed. Beyond ego what is the point for corporate A to make more money than corporate B if they can both make the same yet much bigger amount of money each?
No greed. No fear. Just maths.
  • #109
  • Dec 4, 2017 7:17am Dec 4, 2017 7:17am
Quoting PipMeUp
{quote} But THEY won't decide what solution THEIR algo will come up with. Nothing prevents the algo to work together. They have no NDA signed. Beyond ego what is the point for corporate A to make more money than corporate B if they can both make the same yet much bigger amount of money each?
The same reason why a billionaire wants to be a trillionaire ... (damn, not in a vocabulary yet... oh I invented a new word haha)
  • #110
  • Dec 4, 2017 7:18am Dec 4, 2017 7:18am
Quoting HeyYou
why not just following the trend generated by the algos.... the rest is irrelevant to us poor retailers.
Simply because there will be no trend except for the trend the algo would generate to bait you following it.
No greed. No fear. Just maths.
  • #111
  • Dec 4, 2017 7:19am Dec 4, 2017 7:19am
Quoting jdieieh
{quote} The same reason why a billionaire wants to be a trillionaire ... (damn, not in a vocabulary yet... oh I invented a new word haha)
Yep ego.
No greed. No fear. Just maths.
  • #112
  • Edited 7:52am Dec 4, 2017 7:24am | Edited 7:52am
Quoting PipMeUp
{quote} Simply because there will be no trend except for the trend the algo would generate to bait you following it.
in that case the market would chease to exist, as nobody can make money except the algo.


p.s. sorry for my English.. you don't know how it's frustrating to speak like a retard lol
  • #113
  • Last Post: Dec 4, 2017 7:38am Dec 4, 2017 7:38am
Quoting HeyYou
{quote} sooner or later there will be a damn trend or the market would be an endless consolidation... in that case nobody would be trading anymore. It would be designed to maximize returns and ...die.
Unless unplugged they would continue endlessly according to their loss function. Market would stop moving you're right.
Maybe because money would worth nothing. The algo will keep trading monopoly euros vs monopoly dollars.
Maybe because they would essentially peg all the currencies altogether building a defacto world wide common currency.
No greed. No fear. Just maths.
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