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I am not a trader (and have zero knowledge about it) and what I'm about to say might be utter garbage, but hear me out and correct me where I'm wrong. > This i

I am not a trader (and have zero knowledge about it) and what I'm about to say might be utter garbage, but hear me out and correct me where I'm wrong. > This is a big red flag. A lot of AI/ML people have this arrogance that trading is easy and that you don't need any financial knowledge to make money. Maybe that was true in the 1980's, but at this point, it requires an incredible level of expertise to generate and implement profitable quant trading strategies. If they were making the trading bot via training it on past data and what they call 'sentiment signals' generated from social media reaction, etc, do they need experience with trading? Is there something else that a human trader knows that the bot (which has been trained on past data and accounts for live reactions) doesn't?

elliekelly 7y ago
Something that stood out to me from the article was that the bot "generated a single trade in the morning." Unless they're trying to realize a quick gain by exploiting the "dumb money" most knowledgeable investors specifically avoid trading at market open because the volume/volatility typically comes from Charles Schwab et al. executing trades from regular Joes & Janes. It's noise, not signal. Since the bot wasn't implementing a day-trading strategy it's pretty clear the programmers didn't know much about how the markets work. I would guess the training data reflected that knowledge gap. As the saying goes, you don't know what you don't know.
marcosdumay 7y ago
I'm not a trader either, but I have non-zero knowledge about it... > do they need experience with trading? That's a yes. You don't get to put a lot of money onto an investment without some experience on how it's done. This is true for all forms of investment, not only trading. How do you even evaluate to robot if you don't know the market? What do you do if the robot breaks? What do you do if the market breaks (happens once in a while)? How much money you leave under its supervision?
mruts 7y ago
Absolutely. You wouldn't know how/when to back test, you wouldn't know how to reduce turnover in your portfolio, you wouldn't know how to measure the volatility of your portfolio, you wouldn't understand why you were making or losing money, you wouldn't realize a regime change in the market, you wouldn't be able to efficiently allocate trades to reduce slippage, you wouldn't know how to optimize your portfolio to achieve a better Sharpe ratio, etc etc etc. The list goes on and on and on. I worked as a quant, and the finance knowledge you need is very deep.

elliekelly 7y ago

Something that stood out to me from the article was that the bot "generated a single trade in the morning." Unless they're trying to realize a quick gain by exploiting the "dumb money" most knowledgeable investors specifically avoid trading at market open because the volume/volatility typically comes from Charles Schwab et al. executing trades from regular Joes & Janes. It's noise, not signal. Since the bot wasn't implementing a day-trading strategy it's pretty clear the programmers didn't know much about how the markets work. I would guess the training data reflected that knowledge gap. As the saying goes, you don't know what you don't know.

marcosdumay 7y ago

I'm not a trader either, but I have non-zero knowledge about it... > do they need experience with trading? That's a yes. You don't get to put a lot of money onto an investment without some experience on how it's done. This is true for all forms of investment, not only trading. How do you even evaluate to robot if you don't know the market? What do you do if the robot breaks? What do you do if the market breaks (happens once in a while)? How much money you leave under its supervision?

mruts 7y ago

Absolutely. You wouldn't know how/when to back test, you wouldn't know how to reduce turnover in your portfolio, you wouldn't know how to measure the volatility of your portfolio, you wouldn't understand why you were making or losing money, you wouldn't realize a regime change in the market, you wouldn't be able to efficiently allocate trades to reduce slippage, you wouldn't know how to optimize your portfolio to achieve a better Sharpe ratio, etc etc etc. The list goes on and on and on. I worked as a quant, and the finance knowledge you need is very deep.