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I don’t understand this constant fascination with having language models trade stocks. Language models are very useful tools but not aligned at all with generat
by infecto 5mo ago
I don’t understand this constant fascination with having language models trade stocks. Language models are very useful tools but not aligned at all with generating alpha.
- unglaublich 5mo agoThe usual question: what's "aligned with generating alpha" that a human stock trader can do, but an ai can't?
- tadfisher 5mo agoThat is sidestepping the point: 70-90% of retail traders lose money. The question should be: is AI trading enough of an improvement to justify its non-subsidized costs?
- nemonemo 5mo agoJust like any useful tools, there would be an expert super tool user who could probably generate enough profit based on the tools. The majority would not profit from it in the long run (the monopolistic tool makers would reap any profit from the value chain.)
- radial_symmetry 5mo agoThe humans can't either
- infecto 5mo agoI don’t understand these arguments. You have to realize anything an LLM does has been exploited for decades by well funded shops.
- toomuchtodo 5mo agoAI agents for trading, as well as 24/7 trading are no different than offering sports gambling and prediction markets to the masses; it is a vacuum for the fiat of the unsophisticated. The goal is more trading volume to generate more fees, similar story with private equity wanting access to 401ks to unload PE at peak valuations to bag holders. https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window
- kingleopold 5mo agowell said truth
- snek_case 5mo agoMaybe synergistic with tokenmaxxing. You should be burning more tokens, and you should also be making more trades.
- toomuchtodo 5mo agoThe only way to win is to not play. https://www.bogleheads.org/wiki/Getting_started https://www.bogleheads.org/wiki/Getting_started
- thunky 5mo agoBogleheads are still playing.
- toomuchtodo 5mo agoBogleheads is maximizing potential economic gains from investing in the capital market while minimizing costs from the exposure attempt. The results from dollar cost averaging into VT or a target date fund for the next 30-50 years is likely superior to gambling on single named securities or options, for the unsophisticated.
- thunky 5mo agoRight. But you're still putting your money at risk seeking reward - aka playing the game. Outside of FDIC insured cash accounts, the most anti-gambling way to play would be to buy nothing but TIPS. But even those have a (small) risk.
- clickety_clack 5mo agoThey’re great at generating alpha, just not for these users.
- aerhardt 5mo agoThey’re possibly great at generating alpha in highly complex systems that compose LLMs with tabular machine learning and other analytical techniques at a large scale. So yea, certainly not for these users.
- tombert 5mo agoI use the Interactive Brokers MCP pretty heavily. I don't do any cool automatic fun "trading", but instead I use it to have "pseudo-QQQ". I didn't like the relatively high fees for QQQ, and I realized that Invesco releases the weights for QQQ for free. I also think Tesla is too overvalued, and I want to avoid the SpaceX IPO. With the Interactive Brokers MCP, I just feed it the CSV of QQQ's weights, tell it to remove and redistribute Tesla, and then I tell it to buy "$1000 of pseudo-QQQ", in the form of raw stocks. Doing this, I still basically get the same exposure as QQQ, without any fees. EDIT: Some of the responses here were right; this is a actually a bad idea, at least with the naive way I was describing it. There's a lot more tax stuff that you avoid with ETFs compared to the makeshift thing I'm describing.
- xiaoyu2006 5mo agoThis is fair use, but an average person will just spam LLM with "give me money making strat"....
- klodolph 5mo agoQQQ gets the leverage from, among other things, swap agreements and futures. I don’t think what you have could be reasonably considered “pseudo-QQQ”. It’s like copying a cake recipe, but leaving out the flour and eggs because they are too expensive.
- tombert 5mo agoEven given that, I don't see any reason I couldn't also just mimic what QQQ does with the MCP.
- kokanee 5mo agoAs much as I hate the idea of enabling the desperate masses to gamble like this, LLMs are very aligned tools for sentiment analysis, which can be the foundation of a trading strategy. I think it's extremely irresponsible to use them for execution, though.
- infecto 5mo agoSentiment analysis has been done programmatically for at least 2-3 decades. Retail using an LLM will have no impact.
- deleted 5mo ago[deleted]
- crazygringo 5mo agoAlpha is ultimately the result of analysis, of better analysis than others. LLM's can actually be exceptionally good at research and pattern recognition, i.e. analysis. And while they aren't great at running numbers themselves, they can do exceptional work passing off Python scripts to an interpreter to generate the numerical results they need. I'm quite sure the Robinhood AI is going to be trash, i.e. just a gimmick. But, it's not crazy to think that with the right harness, there are big opportunities for identifying profitable strategies. Especially relying on unparalleled and essentially unlimited research capacity based on public information. More analysis than any single firm could ever hire. And even for Robinhood users, it's entirely plausible that AI-traded stocks will perform much better than the trades a majority of users would make, since most investors are really unsophisticated.
- ai_fry_ur_brain 5mo ago>LLM's can actually be exceptionally good at research and pattern recognition, i.e. analysis. No they aren't, they're good at imitating analysis based on representations of analysis in their training data. Also, Its likely that out dated techniques would over represented in training data. Do you think Jane Street would have the returns they do if they just imitated all their competitors and everyone was using the same strategies?
- ai_fry_ur_brain 5mo ago[flagged]
- Esophagus4 5mo agoThere is a beautiful irony in being condescending about AI simply imitating training data… by repeating a meme you saw on Twitter: https://www.facebook.com/photo/?fbid=772349875124360 https://www.facebook.com/photo/?fbid=772349875124360 (which I guess I will call your training data ;) )
- amanaplanacanal 5mo ago
- nine_k 5mo agoAn LLM may be bad at trading stocks, but an LLM may be good at analyzing the wider context, like the news feed, to inform automated trading driven by a more sophisticated model, called by the LLM as a tool. I don't think that this contraption should necessarily perform tolerably, but the use of an LLM is not necessarily a wrong move.
- RobRivera 5mo agoYou know what they say, you make money off people chasing alpha poorly (I say this. I am they)
- nilamo 5mo agoI think it comes from decades of fear mongering over how "dangerous" stocks and options are. If you can, instead, explain to an llm what your goals are, it can set up a simple buy-and-hold for you. Basically what investment agents used to do in the 80s-90s where the only way to make a trade was to call someone at the broker and explain what you want. Taking a step back, I see this as what llms are actually useful for. Empowering people to do things they might otherwise need to study and research for a few weeks to do. When ultimately, that research is just unnecessary gatekeeping.
- righthand 5mo agoFidelity makes you wait a short period of time after turning-on the “stock options” setting. They also give you documents about options and how to trade them and what to look for. They also ship that same information in a booklet in the mail to you. They make a best effort to inform you of the risks and benefits. I wouldn’t call randomly placing an options bet something you would want to bypass research on…and I frankly think your line of thinking is a dangerous way of operating in the financial space. Especially where it’s critical to understand how moving your money around penalty-free works with different types of investments. And it shouldn’t take you weeks to understand how to trade options or any of the myriad of ways you can invest.
- nilamo 5mo agoAnd I don't think any of that documentation or warnings should be applied to covered calls.
- deleted 5mo ago[deleted]
- righthand 5mo agoRobinhood allows you to trade on the margin by default IIRC. Also the only fear mongering I can imagine is if you were someone who thinks learning things sucks. Otherwise I’m not sure what fear mongering you’re talking about. I have never heard or read any advice to not trade options because they are dangerous. Just that you should understand what you are doing because there is risk involved.
- willXare 5mo ago[flagged]