Could AI Trading Bots Transform the World of Investing?
- Thread starter blueraincap
- Start date
Well so far, all the AI-powered ETFs have been unable to even match the S&P performance. The largest, AIEQ, has not only significantly underperformed the S&P every year for the 6 years it has been in existence, but it has done this while taking more risk.
https://www.dividend.com/active-etfs-channel/how-are-ai-driven-etfs-performing/
https://www.dividend.com/active-etfs-channel/how-are-ai-driven-etfs-performing/
AIEQ was a pure marketing ploy anyhow. Anybody who has tried knows that generating alpha is not as simple as connecting a "smart" algorithm that does well in other more static contexts.
Memory lane: Back when for a short while, QuantConnect tried letting people live stream algos, I streamed an algo called "AI Sucks" in the first month after AIEQ's introduction, which was an utterly simple pair trade with long S&P 500 and short AIEQ in equal volatility adjusted amounts. It was the only realistic algo there being live streamed and also was majorly positive, all the others were based on paper trading bugs or were negative. :-D
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Eventually AI and robotics will reduce the economic value of all human labor and intellectual output to zero, at least asymptotically. That said, I haven't seen evidence indicating we are close to that right now in the trading world. It's the kind of thing that will happen slowly then all at once. When it's over for us traders you won't have to ask, it'll be obvious.
Hello Axon,
Great comments
One of the biggest challenge with us retail traders or atleast with me is, we struggle to build a HFT algo to compete with the other HFT algos by the big institutions.
Actually, there was a guy named Navinder Singh Sarao who ingeniously built an algo that did compete, and frankly beat, the HFTs in their own game. The thing is, if you build a better algo than the HFTs, you'll be prosecuted. So stay low and cover your tracks at all times. And, yes, be sure to click, click, click.
Well, I'll leave that to the pundits to decide. What I'm more interested is will we be up against frequent black swan events like Flash Crash due to rogue AIs? And what if the market doesn't bounce back like the last Flash Crash? What will the exchanges do then? Make the investors who lost their entire portfolio whole again (like they did last time)?
Hello schizo,Actually, there was a guy named Navinder Singh Sarao who ingeniously built an algo that did compete, and frankly beat, the HFTs in their own game. The thing is, if you build a better algo than the HFTs, you'll be prosecuted. So stay low and cover your tracks at all times. And, yes, be sure to click, click, click.
I see there is a documentary on youtube on Navinder Singh Sarao making millions trading the ES. I am going to watch it now.
Thank you for the contact.
Oh yes, I have no choice but to click click click click click.