4 ms·
I know very little about trading but even I can see a whole bunch of red flags here. Firstly, if it has just made it to the news then its probably a decade too
by Dn_Ab 16y ago
I know very little about trading but even I can see a whole bunch of red flags here. Firstly, if it has just made it to the news then its probably a decade too late to take advantage of. Recently there was a news article about how firms have software that reads and operates based on news events. Except that this recent 'news' article was about something that had already been happening for years. Secondly, twitter contains a subset of information in the market. No surprise that there will be some correlation.
Then: predicting up or down movement of a stock is very vague. At what time scale, what sort of trades are required and what sort of response times to execute. What are its drawdowns like, does it account for taxes, commission fees etc. Next, use of a complex nonlinear learning model with lots of parameters - raises alarm bells - these tend to be very susceptible to noise, trading data is highly correlated and typical regularization methods often do not suffice. Then there is the whole issue of over-fitting in general, data used to train on (size, survivor bias, accounting for splits and what not) which makes the whole thing very hand wavy. Without additional info as basic as rate of return, the stated 83% accuracy is meaningless. Like with all things, its easy to get results that work within the limited and safe confines of academic testing but actually shipping a working product is another story.
There has always been a draw to beating the stock market. And these days there is nothing more romantic than doing so using Artificial Intelligence! But I think the most important part of any trading strategy is to be made up of parts that are constantly being swapped out and replaced based on research. you can't just throw a machine learning algorithm at it and think job done. The thing will likely only profit for a couple microseconds. however, as an aside, I would not be surprised if one of [anti]spam/virus/botnets or HFT wars will one day produce AI.