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Why do traders in investment banks feel their jobs are immune from AI, etc?

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Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#191

Post by fffds »

phyalow wrote: post #41
aresant wrote: post #9

HN title is significantly different than the question the submission actually asks which is "why do TRADERS in investment banks . . . " and should be updated

My 2 cents: The job is actually extremely complicated. I wear many hats daily including working as a software developer, IT project manager/architect, salesman to clients, point of contact to other institutions trading desks, legal drafter, tax/accounting policy design, deal negotiator, risk taker/manager, systematic/fundamental strategy research etc. My job title is "Trader". There aren't any dumb big swinging dick…

And this is why traders won't be replaced by AI - Because most are smart individuals who are continuously increasing their worth by learning new skills and ensuring they work WITH new technology rather than opposing it. They regularly elevate their skillset e.g. from manual trading to monitoring, performing trend analysis on a more automated trading system.

I worked in the finance industry as business facing software dev for 10 years and now work in a different but similar industry - my experiences can't be more different. My current industry's business is packed full of "traders" who don't trust the systems, won't work with them and outright refuse to admit the systems can outperform human's PnL numbers (especially not their own) despite being faced with raw numbers saying just that. It's a continuous battle between the technology teams being told to deliver automated systems to reduce costs and increase profitability vs plenty of "traders" who seem to see the systems as some sort of threat. As you say, most of the 'dump big swinging dick' style traders are long gone in finance - they're definitely still around in mine. My guess is that because our industry is significantly smaller meaning less employee opportunities, and the fact that almost all of these "traders" are relatively poorly educated (compared to those in the finance sector) they find it tough to elevate their own skillset to do things such as statistical quantitative analysis etc.

If it wasn't for the very high difficulty of entry, my industry is ripe for statistically minded, methodical, quant people to come in and make a killing.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#192

Post by kasey_junk »

turar wrote: post #149
brianwawok wrote: post #126

Earlier quoted context omitted.

But on the flip side, most physical trading floors are closed. Can't see the last few lasting much longer.

> Can't see the last few lasting much longer. I believe the remaining ones are effectively TV studios for business channels, so they have a completely different purpose now.

There are several floors that have "real" action. A couple of the options pits that are truly specialist and the CBOE VIX pits for instance come to mind.

But I don't think anyone believes those have more than a couple of years left in them.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#193

Post by shas3 »

vegabook wrote: post #66

because traders are used to seeing such predictions fail. Reuters was trading FX electronically since the early 1990s. At the tier one IB I worked for the IT budget was 500m USD a year (across products), and that was in 1997! Huge resources were thrown at automation. However, to this day, large trades in FX (> 10m USD notional) are still almost exclusively performed by humans over a telephone or over the bloomberg me…

One thing we fail to consider when talking about automation is that, at the higher end, tasks are complex and (man+machine) is much much better than machine alone. Further, the time-growth of (man+machine) will asymptotically dominate (machine). This will mean people with newer skills to master (man+machine) will be hired rather than jobs just going away. So predicting a particular job going away is a futile exercise at the higher end. The lower end is different, jobs there are simple enough to fully be automated away.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#194

Post by wuschel »

21 wrote: post #168
Cybiote wrote: post #129

Earlier quoted context omitted.

There are varying levels of sophistication from which data can be learned from. Pigeons can learn non-trivial word concepts and statistics but they do so at a rate that is much slower than a human infant. Thus far, machines have not done well in scenarios of low stationarity. Those are scenarios where the past is not so good a predictor of the future or where the data manifold is rapidly changing. This occurs for exa…

I would add a third big advantage to the digital machine: the ability to seamlessly connect to "classical" algorithms. For example, AlphaGo also used a classic MonteCarlo algorithm. A hypothetical "robot-cat-AI" could for example have access to a really precise physics engine, and also could run at a much higher "frame-rate", so it could see the world in slow-motion and execute really exquisite moves as a result.

How do you know that cats, flies, and other lifeforms run their brains at the same "frequency" as humans?

When it comes to comparing the sophistication, adaptivity and functions of life to the in-silico mashines we produce and use very, very primitive.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#195

Post by coding123 »

dougabug wrote: post #85
vegabook wrote: post #66

because traders are used to seeing such predictions fail. Reuters was trading FX electronically since the early 1990s. At the tier one IB I worked for the IT budget was 500m USD a year (across products), and that was in 1997! Huge resources were thrown at automation. However, to this day, large trades in FX (> 10m USD notional) are still almost exclusively performed by humans over a telephone or over the bloomberg me…

Machine learning is "learning from data." It is not the assumption that there are no dynamics, and that the future will simply be a repetition of the past. To the extent that the future is predictable, learning from data is the best that can be done. The reality is that speech recognition, language translation, face recognition, object classification and detection, semantic segmentation, speech and image synthesis ha…

I bet Google "could" write some algorithms that can predict if a stock will go up or down seconds before change based on live search data. All it takes is for an article or something to come out, then watch people search for "Will IBM stock drop" - and perform live sentiment analysis across all such live queries involving the stock name.

In a sense, it's all about what information you have access to.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#196

Post by johnchristopher »

JumpCrisscross wrote: post #61
johnchristopher wrote: post #33

Earlier quoted context omitted.

If you negotiated the documents yourselves, why were any broker involved ?

Most apartments in New York City have a broker involved somewhere. In this case, the building owner had a sell-side broker. A condition for renting the building was paying the building owner's fee, directly to the broker, and while simultaneously absolving the broker of any responsibility to me, the paying party, over the building owner, the technical client.

Ah, I see. What's in it for the building owner then ?

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#199

Post by WalterBright »

vegabook wrote: post #66

because traders are used to seeing such predictions fail. Reuters was trading FX electronically since the early 1990s. At the tier one IB I worked for the IT budget was 500m USD a year (across products), and that was in 1997! Huge resources were thrown at automation. However, to this day, large trades in FX (> 10m USD notional) are still almost exclusively performed by humans over a telephone or over the bloomberg me…

The trouble with stock market systems is they are great at predicting the past and pretty much useless for predicting the future.

A fellow student at Caltech was developing a stock market AI in the 1970s. He was very secretive about it, and was sure it was going to make him rich. I sometimes wonder whatever happened to him.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#200

Post by WalterBright »

dougabug wrote: post #85
vegabook wrote: post #66

because traders are used to seeing such predictions fail. Reuters was trading FX electronically since the early 1990s. At the tier one IB I worked for the IT budget was 500m USD a year (across products), and that was in 1997! Huge resources were thrown at automation. However, to this day, large trades in FX (> 10m USD notional) are still almost exclusively performed by humans over a telephone or over the bloomberg me…

Machine learning is "learning from data." It is not the assumption that there are no dynamics, and that the future will simply be a repetition of the past. To the extent that the future is predictable, learning from data is the best that can be done. The reality is that speech recognition, language translation, face recognition, object classification and detection, semantic segmentation, speech and image synthesis ha…

The trouble with stock market systems is that any successful one is defeated by its own success - as its logic gets factored into everyone else's strategy.

This self-defeating problem is not present in the other AI applications you mentioned.

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