The future effect of banks using AI software | Page 2 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Metatrader using 40% of the CPU all the time when using EA 6 replies

Software to test EAs for MT4 w/o using a demo? 0 replies

Using MAM software question? 0 replies

Anyone using subscription software for trading signals? 1 reply

Anybody using PDA software? 1 reply

Attachments: The future effect of banks using AI software
Exit Attachments

The future effect of banks using AI software

  • #21
  • Jul 17, 2007 11:17am Jul 17, 2007 11:17am
Quoting zamans98
An US War ship sent to Gulf and US dollar down by 30 pips. Do you think AI can pick that up? Hell no.

Assuming that this piece of news was the cause for a price move in the first place is a bit silly imho. It comes from commentators paid to write a commentary all day and doesn't have to have anything to do with reality.
Trust price. Know yourself.
  • #22
  • Jul 17, 2007 11:20am Jul 17, 2007 11:20am
Quoting WTB
How many variables can there be that are not computable? interest rates? oil prices? fundamental data (employment data, trade balance, etc)? technical levels of support/resistance? international affairs (wars, terrorism, etc)? obvious levels of stop loss placement?... all that can easily be computed. So why not?
Look it from another angle, if computers can outsmart human, they human race are doom, right?

Human create computers, but computer cannot create HUMAN, so that is the TRUTH. The same goes with trading. Forget about FOREX, how about running a small shop? Can computer wins over human? NO WAY...
  • #23
  • Jul 17, 2007 11:21am Jul 17, 2007 11:21am
Quoting SeekingLight
Assuming that this piece of news was the cause for a price move in the first place is a bit silly imho. It comes from commentators paid to write a commentary all day and doesn't have to have anything to do with reality.
FX moves with SPECULATION, as you know very well. And that piece of crap news = SPECULATION.
  • #24
  • Jul 17, 2007 11:23am Jul 17, 2007 11:23am
Quoting zamans98
Human create computers, but computer cannot create HUMAN, so that is the TRUTH.

You can already automate the molding and creation of stem cells and partial body parts.

You can also theoretically extend this to in vitro fertilization and breeding if one just put enough effort and sophistication into this.

We already manufacture machines with machines, biotech has already begun the machinization of the more fleshy things...

Limiting beliefs.

There'll always be a difference between a possibility and a choice to do so.
Trust price. Know yourself.
  • #25
  • Jul 17, 2007 11:24am Jul 17, 2007 11:24am
AI replacing humans is on the same level as time travel.

Comic book material.
  • #26
  • Jul 17, 2007 11:24am Jul 17, 2007 11:24am
Quoting zamans98
FX moves with SPECULATION, as you know very well. And that piece of crap news = SPECULATION.
FX moves according to price in my world.
Trust price. Know yourself.
  • #27
  • Jul 17, 2007 11:26am Jul 17, 2007 11:26am
Quoting SunTrader
AI replacing humans is on the same level as time travel.

Comic book material.
The Eliza AI has already managed to successfully fool real people into believing it to be a real person ages ago.

Kurzweil AI poetry is indistinguishable from real poetry to most casual observers.

You read the wrong books.
Trust price. Know yourself.
  • #28
  • Jul 17, 2007 11:28am Jul 17, 2007 11:28am
Quoting DutchTrader
How is that related to FX?
There's a move to make all financial news releases machine intelligble, which means that any statistically useful information can be extracted and acted on much faster than the average trader can react. The process doesn't supply the statistics - it's up to the individual funds to apply whatever interpretation they want - but it does reduce the price discovery mechanism which in the past has been profitable for many short-term traders.
  • #29
  • Jul 17, 2007 11:32am Jul 17, 2007 11:32am
Quoting SeekingLight
FX moves according to price in my world.
yeah, they listen to me first before decided where to go.
  • #30
  • Jul 17, 2007 11:32am Jul 17, 2007 11:32am
Quoting HalifaxCB
The process doesn't supply the statistics - it's up to the individual funds to apply whatever interpretation they want - but it does reduce the price discovery mechanism which in the past has been profitable for many short-term traders.

There's long term profitable short-term traders?

(just teasing hehehe)

But in the end price moves somewhere as posted above and that in turn will create a result which in turn is interpretable. And if these software thingies end up changing long term positions due to a sudden news release being different than expectations, then I don't expect them to last longer than the human newstrader counterparts
Trust price. Know yourself.
  • #31
  • Jul 17, 2007 11:34am Jul 17, 2007 11:34am
Quoting SeekingLight
Assuming that this piece of news was the cause for a price move in the first place is a bit silly imho. It comes from commentators paid to write a commentary all day and doesn't have to have anything to do with reality.
Not really. What many traders see as significant moves are - for larger amounts of money - simply risk adjustment effects. Something like a new US carrier group in the Gulf could imply an increased risk of US action against Iran (for example) which would affect oil markets, and hence the USD. So if you are exposed to billions of $'s US, a bit of news like that might make you want to cut your exposure a little, particularly if you are a ME investor (and they hold a lot of flighty capital).
  • #32
  • Edited 11:47am Jul 17, 2007 11:36am | Edited 11:47am
Quoting SeekingLight
Assuming that this piece of news was the cause for a price move in the first place is a bit silly imho. It comes from commentators paid to write a commentary all day and doesn't have to have anything to do with reality.

Such an assumption isn't really silly, but even if, it is a fact that a lot of other news would move a currency's value. Now the question was, can AI catch up with that ? Eaaaasily

Personally I am very interested in this area, as I studied Computer Science. Just look at all the commercially and publicly available software for the computer, non-trading related software. That's is what we know of, the current existant technology though is, obviously, much further beyond what we know of, the military is one example. When you hear of a fund manager getting certain returns and such, he could be using AI, especially on the higher probability trades, but the news would still be that fund manager "Whoever whoever" got "so and so" returns this year, not a computer. Bottom line, I do believe that AI and Nueral Networks are being employed successfully today and further developement in this area is for sure, with that being said, I do not think it will be the case for most retail traders trying to use AI.

Additionally, the Computer is a MASTER at what is supposedly THE best trading tactic (Discipline, Mastering Emotions, and Psychology), and I say supposedly because I haven't found out for myself yet. But anyways I don't think this is of the same importance for big institutional traders as it is for the small retail ones, that reason for that is that big banks most likely have different agendas and criterea for currency exchange, the bottom line at any agenda is "profit", but the mechanisms differ.
  • #33
  • Jul 17, 2007 11:39am Jul 17, 2007 11:39am
Quoting SeekingLight
The Eliza AI has already managed to successfully fool real people into believing it to be a real person ages ago.

Kurzweil AI poetry is indistinguishable from real poetry to most casual observers.

You read the wrong books.
I don't read comic books (since I got over the age 11, that is), Poetry, what are you kidding and the Eliza AI, online I suppose?

Real world examples puleeze. Are you a trekkie as well.
  • #34
  • Jul 17, 2007 11:40am Jul 17, 2007 11:40am
Quoting HalifaxCB
Not really. What many traders see as significant moves are - for larger amounts of money - simply risk adjustment effects. Something like a new US carrier group in the Gulf could imply an increased risk of US action against Iran (for example) which would affect oil markets, and hence the USD. So if you are exposed to billions of $'s US, a bit of news like that might make you want to cut your exposure a little, particularly if you are a ME investor (and they hold a lot of flighty capital).

I'll gladly accept that as a possibility.
However if I'm to show any sort of consistent approach to my interpretation of the reality surrounding me I have to apply interpretative filters.
So while several underlying truths may be viable for whatever outcome in reality, only the most for me personally efficient is allowed to be passed in order to sustain my own belief system's stability.
Else it would lock up due to too much interference. We all do this day in and out on gazillions of levels, be it social interaction or other decision making processes.

Hence me saying nothing "has" to be this or that way and that all of this is my personal view, as I have chosen a (mostly) singular way of approaching this all

Doesn't mean there aren't 50 other ways of viewing and interpreting it.
Fine with me as long as it works for everyone involved

Basically I have to take one basis / assumption as pertinent to me and my actions and can allow for anything else to be possible on a more non-decision related level.

That's why I end up prefering a s/r / trendline / EMA being the cause for price movement rather than a missile being launched on a single ship.

Note however that I do not rule out these eventas as utterly important in the right dimension. I saw the oil spike happen live as there was speculation on military action - price went berzerk in a heartbeat. But as this is nonpredictable irrational behavior it gets filtered and taken care of via risk management.
Trust price. Know yourself.
  • #35
  • Edited 11:56am Jul 17, 2007 11:45am | Edited 11:56am
Quoting SunTrader
I don't read comic books (since I got over the age 11, that is), Poetry, what are you kidding and the Eliza AI, online I suppose?

Real world examples puleeze. Are you a trekkie as well.
That just made you appear uninformed and offensive

And unwilling to spend 5 minutes alone with google.

Besides generating poetry there are also automated creative writing analysis engines. We already have speech-text conversion. We have grammar interpretable. And so forth.

We have a lot of things underway in the AI department and come a long way. It's highly intriguing stuff if one is into that sort of thing.

Being uninformed about it does not prevent things from existing

Blade Runner (Turing Test) would most likely be a more fitting reference btw.

From a first handful of random hits on Google without too much selectivenes (keywords: ai generated poetry. alternatively try Kurzweil AI, Eliza AI / Weizenbaum and just follow up on the papers/sources/links/etc pp. Surf the web *g*):

http://evolutionzone.com/kulturezone...ndex_body.html

http://www.machinebrain.com/Artifici...nce/more4.html

http://www.cs.bham.ac.uk/~nxm/mscPoetry/mscIndex.html

http://www.answers.com/topic/mit-com...nce-laboratory

Spend an afternoon on the topic and some rather interesting things will come out =)
Trust price. Know yourself.
  • #36
  • Jul 17, 2007 11:55am Jul 17, 2007 11:55am
Quoting pfdtrader22
I knew this was coming LOL! I was also waiting for someone to bring up DE Shaw who is managing even more assets (29bil at last read) than James Simons himself (6.4 - 9 bil medallion fund, however Simons returns vastly outstrip Shaw's). Simons is someone that I admire more than anyone in this industry, but when I compare between 15% (his 2006 return) and John Arnold's consistent 200% + returns for more than 5 consecutive years, (except for one which was 178%, but this year it was over 350%!) I just tend to think that AI by itself isn't going to outstrip our decision making. I also (check the sig) greatly admire Soros/Druckenmiller and I'd like to see AI make calls/decisions like some of those made by that duo. In any case, I love tech (I'll say it again!), but I just don't feel the AI argument to be realistic. Also, the chess comparison is about as far off as possible, even though I respect your thoughts (trading and otherwise) WTB. You too Halifax. You guys always make me think
Lol, thanks (I think ).

FWIW, I do agree with you on AI especially - I had a good deal of experience working with it, particularly in the 90's when it was really a hot item - though there I was working in signal analysis for several (non-FX) projects; I never found it particularly robust. It is useful as a tool for identifying opportunities, but they always have to be checked for reasonableness, since AI, even at it's best, has a intelligence level along the level of a cockroach....

Statistics is a little different, since at least there one generally has a model (i.e. a human design) of the underlying relationships. But even there, assumptions (like Gaussianness) can kill you, especially those that "believe" in statistics, rather than just use them as a moderately reliable tool. (Again, Bookstaber's book has great contrary examples). In general though, I guess I would say that the best thing one can do is look at one's own strengths & weaknesses and build on those.
  • #37
  • Jul 17, 2007 12:10pm Jul 17, 2007 12:10pm
We have no need to fear the effects of AI as private traders. The banks need the speculators, small and big, to trade against. Their AI is useless without us.

What we should fear is a more common enemy that has shown its ugly head throughout history - greed. Namely, greed in the form of insider collusion between the big banks, price fixing, arbitrary currency rate manipulation by various countries, and other forms of contract breaking.

We have international laws and country laws that are supposed to guard against these things, but when the time comes that one side of the currency see saw is way out of balance, countries will start crying out for some large international board to economically regulate currencies much like China does to its own currency. If such a day comes, then trading for the small guy will be nearly over.


.
  • #38
  • Jul 17, 2007 12:27pm Jul 17, 2007 12:27pm
I dunno Kudzu, seems to me that one of the joys of FX is that it is really one of the most fixed games in town. I mean, suppose the comptrollers of the big companies got together periodically to talk about what their stock values should be, everyone would have a fit. But get the finance ministers together, it's a major news event.... ditto for CB officials... And wasn't it just last spring at the IMF conference that the heads of the 20 largest hedge funds were called in after for private "discussions"? Can't remember the details, alas. But collusion is the name of the game...
  • #39
  • Jul 17, 2007 12:43pm Jul 17, 2007 12:43pm
Quoting zamans98
Look it from another angle, if computers can outsmart human, they human race are doom, right?

Human create computers, but computer cannot create HUMAN, so that is the TRUTH. The same goes with trading. Forget about FOREX, how about running a small shop? Can computer wins over human? NO WAY...
Let's just leave "The Matrix" pseudo-philosophy out of this alright? My point is that computers can now play chess better than the world champion, they can fly a 747 better than a 30 year-experience pilot or can play Street Fighter 2 better than an enraged teenager (this last example is a joke hehe). So why would trading be different in a hypothetical future?
  • #40
  • Jul 17, 2007 12:52pm Jul 17, 2007 12:52pm
Automated Trading Desk is a firm that trades 6% of the volume of the NYSE and NASDAQ every single day.

They trade strictly on math models with Linux clusters.

They were purchased by Citigroup last week for $640 million.

www.atdesk.com

Word on the street is that they are moving into futures and foreign currencies.

Quoting SunTrader
AI replacing humans is on the same level as time travel.

Comic book material.
0 traders viewing now