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To take your comment a little deeper despite me knowing you are being facetious, I think that's exactly it: the algorithms cannot communicate to facilitate thes

To take your comment a little deeper despite me knowing you are being facetious, I think that's exactly it: the algorithms cannot communicate to facilitate these types of advantages. They cannot, in essence, be human. In a world ran and dominated by humans, there will always be an inherent advantage to being part of the race that creates the game. If algorithms perfect a system in such a way that there stands no gain to be made by those at the top, people will simply create a new game to play.

ChuckMcM 9y ago
until they can. And at that point it gets really weird. I have heard reports (but cannot confirm them obviously) that machine learning techniques are already creating trading strategies that exploit weaknesses in other trading system algorithms. At what point does the algorithm correlate what it can see in email inboxes on a connected cloud service with advantageous stock trades ...
- dsacco 9y ago
  > I have heard reports (but cannot confirm them obviously) that machine learning techniques are already creating trading strategies that exploit weaknesses in other trading system algorithms. This is true, but does not require machine learning.
- danieltillett 9y ago
  This is where the real money is to be made in AI trading. Of course this sets of a very interesting series of countermeasure/measure battles.
  - perilunar 9y ago
    Is money being made? Seems to me that all trading does is just redistribute existing money, and no wealth is created. What a waste to have all these computational resources engaging in a continual 'series of countermeasure/measure battles' instead of calculating something useful.
    - TheAdamAndChe 9y ago
      It may seem pointless, but trading like this is actually incredibly useful. It (mostly) removes emotion from the equation, thus lowering the chances of market shocks and decreasing volatility.
    - aianus 9y ago
      Trading results in price discovery. Accurate prices allow more informed investment decisions and the development of more real wealth. The alternative is something like a centrally planned economy which have generally been unsuccessful.
- deepnotderp 9y ago
  > I have heard reports (but cannot confirm them obviously) that machine learning techniques are already creating trading strategies that exploit weaknesses in other trading system algorithms. That was being done in HFT long before ML came about. In fact, it's supposed to be the primary source of profit.
jedberg 9y ago
I wasn't being facetious -- I meant exactly what you said. Two humans having coffee and trading secrets "they heard around town" will beat an algo any day of the week.

ChuckMcM 9y ago

until they can. And at that point it gets really weird. I have heard reports (but cannot confirm them obviously) that machine learning techniques are already creating trading strategies that exploit weaknesses in other trading system algorithms. At what point does the algorithm correlate what it can see in email inboxes on a connected cloud service with advantageous stock trades ...

dsacco 9y ago
> I have heard reports (but cannot confirm them obviously) that machine learning techniques are already creating trading strategies that exploit weaknesses in other trading system algorithms. This is true, but does not require machine learning.
danieltillett 9y ago
This is where the real money is to be made in AI trading. Of course this sets of a very interesting series of countermeasure/measure battles.
- perilunar 9y ago
  Is money being made? Seems to me that all trading does is just redistribute existing money, and no wealth is created. What a waste to have all these computational resources engaging in a continual 'series of countermeasure/measure battles' instead of calculating something useful.
  - TheAdamAndChe 9y ago
    It may seem pointless, but trading like this is actually incredibly useful. It (mostly) removes emotion from the equation, thus lowering the chances of market shocks and decreasing volatility.
  - aianus 9y ago
    Trading results in price discovery. Accurate prices allow more informed investment decisions and the development of more real wealth. The alternative is something like a centrally planned economy which have generally been unsuccessful.
deepnotderp 9y ago
> I have heard reports (but cannot confirm them obviously) that machine learning techniques are already creating trading strategies that exploit weaknesses in other trading system algorithms. That was being done in HFT long before ML came about. In fact, it's supposed to be the primary source of profit.

jedberg 9y ago

I wasn't being facetious -- I meant exactly what you said. Two humans having coffee and trading secrets "they heard around town" will beat an algo any day of the week.