Re:Behind the Market Swoon: The Herdlike Behavior of Compute...
by CoolGuySteve on Wednesday December 26, 2018 @04:01PM
(#18764842)
In my experience as a quant dev for various traders , neural networks are almost never used for trading, or if they are they're very limited in their application.
But many traders will claim their use because they are obtuse and impressive sounding.
One PM once described it as "machine learning in the streets, linear regression in the sheets".
>the computers are doing what? Looking at a variety of information and judging what will happen
Probably but not necessarily. That code which is explicitly understood and written explicitly to weigh information to choose outcomes certainly is.
But were complex neural networks are extensively involved, they become a black box. In markets where gains could be maximized by cooperation, those systems that find ways to cooperate with other systems outside their organization will eventually be chosen and become the dominant. Chosen purely from their ability to get better results.
Even if completely isolated, signaling is not impossible. A straight forward technique would be to use transactions to communicate in the same way bridge players do.
So potentially software could outperform humans for at least two reasons: better and faster analysis of data. But also doing things humans are unable.