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Do we need Artifical Intelligence in trading?

  • #1
  • First Post: Sep 19, 2017 3:58pm Sep 19, 2017 3:58pm
Hi,
I don't want to start a thread on specific trade system. I only wonder if we - human traders - really have something to do in biz yet.
I don't even think about HF systems because I don't think they are AI. But there is no doubt that there is a real threat that humans will be replaced with algorithms in next few years in many even in hand-managed branches as mutual funds.
How to prepare to this new conditions when human will be competing with more and more sophisticated algorithms?
Would like to see your opinions. Are we threatened by new tech achievements? Should we give up or maybe it is our chance as humans can still outsmart AI?
  • #2
  • Sep 19, 2017 8:49pm Sep 19, 2017 8:49pm
Quoting Ulule
Hi, I don't want to start a thread on specific trade system. I only wonder if we - human traders - really have something to do in biz yet. I don't even think about HF systems because I don't think they are AI. But there is no doubt that there is a real threat that humans will be replaced with algorithms in next few years in many even in hand-managed branches as mutual funds. How to prepare to this new conditions when human will be competing with more and more sophisticated algorithms? Would like to see your opinions. Are we threatened by new tech...
I don't even think about HF systems because I don't think they are AI.......yes 100%.

But there is no doubt that there is a real threat that humans will be replaced with algorithms in next few years in many even in hand-managed branches as mutual funds. ......Don't think so since Forex is decentralized exchange business.

How to prepare to this new conditions when human will be competing with more and more sophisticated algorithms?.....All system will co-exist peacefully. If AI trading turns to be too good we surely have chance.

Are we threatened by new tech achievements? In fact yes 100% most of repeated jobs will vanish and replaced by AI . It'll bring huge unemployment since AI and Robotics will replace jobs. But impact in forex can be low since Forex is purely manipulated by human brains and forex market purely decentralized.

Should we give up or maybe it is our chance as humans can still outsmart AI? In trading human intelligence always better.
Never Gamble Forex
  • #3
  • Sep 19, 2017 9:12pm Sep 19, 2017 9:12pm
Quoting Ulule
Hi, I don't want to start a thread on specific trade system. I only wonder if we - human traders - really have something to do in biz yet. I don't even think about HF systems because I don't think they are AI. But there is no doubt that there is a real threat that humans will be replaced with algorithms in next few years in many even in hand-managed branches as mutual funds. How to prepare to this new conditions when human will be competing with more and more sophisticated algorithms? Would like to see your opinions. Are we threatened by new tech...
Personally, my take is, No Intelligence can come close to Human Brain, Intelligence, Thinking, Visualizing, Action.
newzTrader
  • #4
  • Edited 9:57pm Sep 19, 2017 9:30pm | Edited 9:57pm
Quoting yesyoucan
{quote} Should we give up or maybe it is our chance as humans can still outsmart AI? In trading human intelligence always better.
For the sake of argument...

Do you know 'snake" game. Quite simple, you drive a snake that moves in a limited space, that eats, grows and keep moving. Your job is to keep growing without getting cornered. Try, play yourself and see how your go. And I really mean it, you must get feel for difficulty of this game. Do not imagine, do not assume, just download that game and play. Once you do, watch how AI does it. Can you do better?

Inserted Video


How about simple maze? Can you solve it faster?

Inserted Video


How about reading and interpreting major news and economic data releases? Last week I saw algos cleaning stop losses in 80p range on gbp pairs in less then 5 seconds after UK and BoE releases. Do you think those algos where instructed by humans to clean those level? I cannot see any human making such a decision in such a short time. Obviously those algos were running at least semi-autonomously. Can you do better? If you were trading that event, where pip-wise did you enter in comparison to price level right before release?

Lets keep pushing the envelop. How about reading aggregated order levels for all markets in conjunction with data releases and fundamental factors, analyzed in real time for finding the most profitable price action - obviously at expense of less verse participants - meaning you and me. It is a bit like this maze exercise. Would that be scary enough and hard to adapt?

Finally, it is this: surely, in that future environment, there will be humans who will, either entirely manually or with help of algos, compete in the markets. Question is: is it gong to be you? Do you have what it will take to do so? Do you have enough intelligence, creativity and stamina to find new way, implement and win? This question is for anyone who read this thread.
  • #5
  • Sep 20, 2017 3:00am Sep 20, 2017 3:00am
Quoting Ulule
Hi, I don't want to start a thread on specific trade system. I only wonder if we - human traders - really have something to do in biz yet. I don't even think about HF systems because I don't think they are AI. But there is no doubt that there is a real threat that humans will be replaced with algorithms in next few years in many even in hand-managed branches as mutual funds. How to prepare to this new conditions when human will be competing with more and more sophisticated algorithms? Would like to see your opinions. Are we threatened by new tech...

With AI as it stands imho, we should use computers to execute and as an analysis tool, humans provide the creativity, the ideas for what to test.
I live entirely from the growth of my personal trading account
  • #6
  • Sep 20, 2017 4:12am Sep 20, 2017 4:12am
Quoting jdieieh
{quote} For the sake of argument... .................Do you have enough intelligence, creativity and stamina to find new way, implement and win? This question is for anyone who read this thread.
Nice Inputs I'm curious if more people use it who else looser in game!
Never Gamble Forex
  • #7
  • Sep 20, 2017 4:22am Sep 20, 2017 4:22am
Quoting yesyoucan
{quote} Nice Inputs I'm curious if more people use it who else looser in game!
Looser will be the same as today:

1. Goverments
2. Lazy funds, such as mutual funds
3. Individuals, like most of us

It is an arms race that has been running around for a quite while and neither of those 3 entities never won nor never will win. Big sharks will fight between each other occasionally, but as usual they will mostly feed off those three.
  • #8
  • Sep 20, 2017 4:28am Sep 20, 2017 4:28am
A good and highly skilled trader will always make money, no matter if there are A.I.s around or not.
  • #9
  • Sep 20, 2017 4:34am Sep 20, 2017 4:34am
Quoting The-Flipper
A good and highly skilled trader will always make money, no matter if there are A.I.s around or not.
Can I paraphrase a bit:

"A good and highly skilled GO-player will always make money, no matter if there are A.I.s around or not."

...versus

https://techcrunch.com/2017/05/23/go...man-go-player/

"Google’s AlphaGo AI Go player has defeated Ke Jie, Go world champion... Jie said that AlphaGo’s performance left him “shocked” and “deeply impressed” in post-match statements, noting that the moves the computer played “would never happen in a human-to-human match."

We are not talking here 'snake' game any more. We are talking about quite complex GO game with a world champion.
  • #10
  • Sep 20, 2017 4:39am Sep 20, 2017 4:39am
Can I give you a bit of taste of that in financial markets?

Did anybody of you caught those moves right now??? ...I rest my case.

Attached Image (click to enlarge)
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  • #11
  • Sep 20, 2017 5:05am Sep 20, 2017 5:05am
Trading is more of an art and luck (like painting or sculpturing) than intelligent. That's why AI won't work when it comes to trading itself. But there are already some attempts to use AI in the trading world where it first tries to separate the good traders from the bad ones, then choose to become the follower of the good ones only ...
Market is not random but unpredictable
  • #12
  • Sep 20, 2017 5:10am Sep 20, 2017 5:10am
Quoting jdieieh
{quote} Can I paraphrase a bit: "A good and highly skilled GO-player will always make money, no matter if there are A.I.s around or not." ...versus https://techcrunch.com/2017/05/23/go...man-go-player/ "Google’s AlphaGo AI Go player has defeated Ke Jie, Go world champion... Jie said that AlphaGo’s performance left him “shocked” and “deeply impressed” in post-match statements, noting that the moves the computer played “would never happen...
If you compare Go with trading, then you no clue what real trading is all about.
  • #13
  • Sep 20, 2017 5:12am Sep 20, 2017 5:12am
Quoting 4for4
Trading is more of an art and luck (like painting or sculpturing) than intelligent. That's why AI won't work when it comes to trading itself. But there are already some attempts to use AI in the trading world where it first tries to separate the good traders from the bad ones, then choose to become the follower of the good ones only ...
https://motherboard.vice.com/en_us/a...eatest-masters
https://www.newscientist.com/article...styles-of-art/
http://www.dailymail.co.uk/sciencete...ing-style.html

Art? Can anybody of you take a brush and without any training paint and like that?

Reality is this: average Joe already lost with AI and we are talking at the moment about embryo AI. What happens when that grows?

I can win chess with any of my friends. I have played literally thousands of games. But I cannot win chess game with my mobile phone on highest settings.
  • #14
  • Sep 20, 2017 5:17am Sep 20, 2017 5:17am
Quoting The-Flipper
{quote} If you compare Go with trading, then you no clue what real trading is all about.
Is there a chance that you dont understand how advanced AI might solve game of trading? Is there any chance that heuristic schema you hold when you think about trading can become completely obsolete?

Did you missed what this guy said: "noting that the moves the computer played “would never happen in a human-to-human match". And he lost.

That was my point.
  • #15
  • Sep 20, 2017 5:30am Sep 20, 2017 5:30am
Quoting 4for4
Trading is more of an art and luck (like painting or sculpturing) than intelligent. That's why AI won't work when it comes to trading itself. But there are already some attempts to use AI in the trading world where it first tries to separate the good traders from the bad ones, then choose to become the follower of the good ones only ...
Do you now how long takes human to learn how to paint a good, believable, artistic, ascetically pleasing portrait?

http://www.cloudpainter.com/blog/artobotic-prints

http://www.cloudpainter.com/blog?category=Neural%20Jet
  • #16
  • Sep 20, 2017 5:35am Sep 20, 2017 5:35am
Quoting jdieieh
{quote} https://motherboard.vice.com/en_us/a...eatest-masters https://www.newscientist.com/article...styles-of-art/ http://www.dailymail.co.uk/sciencete...ing-style.html Art? Can anybody of you take a brush and without any training paint and like that?
Nope ... it will take years of practice and experience ... that's why it's an art ...
Market is not random but unpredictable
  • #17
  • Sep 20, 2017 5:45am Sep 20, 2017 5:45am
Quoting 4for4
{quote} Nope ... it will take years of practice and experience ... that's why it's an art ...
Thats is right. I will take at least couple of years training for a person to paint like this robot. And this robot paints with 5 brushes at once, pretty good portraits for my eyes!

So... if trading is art, where this leaves us?

So... if trading is math, where this leaves us?

So... if trading is analytical skills, where this leaves us?

And... what if machines change trading that is not art, not math, not analysis any more? Who of us will understand advanced AI Goldman Sachs will use. It will not be publish in the books. And even if you could look inside the brains, see connections and patterns, do you think you would figure it out?

I am not sure if any one will be able. It will be different way of thinking.

It will be like with moving from point A or B. Who of you can replace legs with wheels and move 100x faster? Unless it is give to you in exchange of money OR you have skills to build a car yourself, completely from scratch, you cannot do it. And why would Goldman Sachs give sell you golden goose? Which leaves us with a questions... who of you guys have enough intelligence, creativity and stamina to build AI to help you compete in the market? If you are so cleaver, why you cannot make hell a lot of money now when it is much easier?
  • #18
  • Sep 20, 2017 6:47am Sep 20, 2017 6:47am
Quoting jdieieh
{quote} Thats is right. I will take at least couple of years training for a person to paint like this robot.
These are the last years of trading we will ever experience. Since I started around 8 years ago the moves are already far faster. spikes that will wipe out overleveraged account are WAY more commonplace. And to cap it all, markets entries requirements are getting stricter and stricter.

10 years. 5 maybe. possibly even less, and trading as we all understand it here won't exist.

The transition will be so fast you will barely keep up with what's going on. think of the rise of uber, and imagine that level of ambition, capital and skill.

Enjoy it while it lasts
  • #19
  • Sep 20, 2017 7:21am Sep 20, 2017 7:21am
First of all any broker a trader uses with lot sizes smaller than 1 lot is a market making broker. All ECN, STP claiming brokers included. Interbank markets do not accept fractional lots. Lots must be multiples of round lots (1, 5, 100 etc...)

Trading is a zero sum game (actually minus sum game because of spreads and commissions. So for a trader to win, some trader must lose. Let us keep this in our minds for the moment.....

So when the algos are trading in interbank market or futures markets they see the action of the orderbooks in real time.
They have all the fundamental data fed into the algos.
In futures and options they use the insider trading indexes and etfs as input data.
They can separate the retail trades and institutional trades. (If COT data records are kept in some server which is 1 week delayed for all retail traders. I am sure smart money accesses that data with a very small delay).
And probably many more data they use that we are not even aware of.

In the light of the above points here are some questions:
As I mentioned above a trader must lose in order for the other trader to win. What if algos are chasing only the "Dumb Money"?
Could this be the only reason why no retail trader can make money in the long run?
If you know some trader that you know is always losing, wouldn't you take the other side of his trades blindly? Or be his/her market maker?
The algos or traders always need an exploit to win constantly. So no exploit no win.
Why try to guess the market if you know what the dumb money is doing?
Take a look at the weekly COT data and see who is always on the wrong side of the market and who is on the right side??

Let's think about that for a moment.

Good Luck all.....
  • #20
  • Sep 20, 2017 7:28am Sep 20, 2017 7:28am
Quoting jdieieh
{quote} Is there a chance that you dont understand how advanced AI might solve game of trading? Is there any chance that heuristic schema you hold when you think about trading can become completely obsolete? Did you missed what this guy said: "noting that the moves the computer played “would never happen in a human-to-human match". And he lost. That was my point.
Did you?
There is nothing new under the sun.
Trading was, is and will always be the same.
Unless you have access to a crystal ball to foretell the future.
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