AI - WHY? Trading Systems

Norman Ma (ma@duncan.cs.utk.edu)
Wed, 16 Dec 1998 22:42:27 +0100 (MET)

-- -Hello (or perhaps: "Help!")
"predict an almost-but-not-quite-random time series", sounds
interesting. With all due sincerety, automated trading systems
have been proven profitable for arbitraging. All other predictive
systems at this point is PITS (Pie In the...)

More specifically, can a program predict what the 23 or so analysts
going to say when Ascend Communications Inc. comes out with its
quarterly report? The answer is no. Moreover, a program cannot
predict social, political, economic, nor natural events.

A company's stock price is a reflection of all its future
activities discounted to the present. At the present,
human does this type of valuation much better than machines.

--NKM

-- -I am currently doing a PhD in Intelligent Trading Systems (as in stock
-- -markets, etc.), and as the title suggests fully intended to utilise various
-- -aspects of Artificial Intelligence. As you'd imagine, the major goal is
-- -trying to predict an almost-but-not-quite-random time series.
-- -
-- -Neural networks, genetic algorithms, fuzzy logic - they all seemed so
-- -interesting (yes, even fun!), my only concern was which technique(s) were
-- -best applied to this sort of application.
-- -
-- -I now seem to be gradually eliminating all of the AI techniques which I set
-- -out to use.
-- -
-- -Goodbye fuzzy logic - why not do it properly using statistical inference
-- and
-- -probability?
-- -
-- -GAs? Just another search algorithm - adaptive simulated annealing (ASA)
-- may
-- -be better. (Okay, ASA could be considered AI too?)
-- -
-- -Neural networks? Classical statistical pattern recognition may be better
-- in
-- -many cases.
-- -
-- -I'm not aware of much work on the theoretical study of intelligent space.
-- -Maybe this should be tackled first?
-- -
-- -Any comments or suggestions would be appreciated. Either to rekindle my
-- -enthusiasm for AI, or to confirm my suspicions.
-- -
-- -Regards
-- -
-- -Martin Sewell
-- -martin@msewell.force9.co.uk
-

-- 

--NKM

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