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Silicon Valley Hedge Fund Takes on Wall Street with AI Trader

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Re: Silicon Valley Hedge Fund Takes on Wall Street with AI Trader

#81

Post by edblarney »

brilliantcode wrote: post #66
edblarney wrote: post #52

Earlier quoted context omitted.

Surely - but 'AI' is new. Surely 'Deep Learning' is something at least they are not doing widely, because it's difficult to pull off. That said, anyone actually doing it would be smart enough to shut the hell up about it. Finally - one might argue that the big money is all made in 'soft insider' information anyhow, and that with so much tech, analysts already there ... there's just no way to win without clear leverag…

This is just an anecdotal experience but according to a former hedge fund manager, insider trading is an open secret in the industry. You really can't expect to gamble away billions of investor's money without an edge. Information is the only possible edge that is closely guarded in the markets. I don't know how true that is, he's a washed up piece of shit that wall street chewed out but has the eyes and ears of gord…

Big funds will have direct access to CEO's and execs.

They'll sit down for an interview. Technically speaking, everything that the CEO will say has to be public information. It has to be above bar.

But sitting in the room, being right there, one might easily be able to glean more information than is actually public. Ergo - and edge. And it's not quite illegal.

So that is a form of fairly above board 'soft inside' information that nobody will ever go to jail for.

As far as more obvious 'insider' - maybe so, maybe not - I don't know - but I do know that you don't even need to do that.

But generally I believe there is basically no reasonable way to beat the market: all of the quant stuff is done by very smart people, fast computers, the value investing done by massive players like Buffet, and the regular investing done by people with 'extra info'.

I really do think that small retail investors are the losers in the casino.

Oh - and also 'big dumb money', i.e. low-performing people at big banks, sitting on huge sums that the hedges get little bites out of.

Re: Silicon Valley Hedge Fund Takes on Wall Street with AI Trader

#82

Post by got2surf »

Ntrails wrote: post #45
got2surf wrote: post #38

Earlier quoted context omitted.

Great point. And even if you are "with the crowd" more often than you are not, your timing/sizing on each trade you make as a day trader or mom-and-pop investor is very likely to be worse than an institutional trading firm. So you can be right on a "buy" vs "sell" decision 51% of the time, but an algo trading firm has probably executed with better timing/trade size and beaten you to a percentage of the profit. A frie…

I'd rather just try really hard to get people to understand that active trading is negative sum, and that unless (As a mom and pop investor) you are properly bench-marking against a relevant index - you're just lying to yourself. Sure HFT guys are faster than you to get short term signals and make money on the micro scale - but even ignoring that way too many people are thinking they're beating the market and they re…

Yes! Completely agreed. The fact that it's a negative sum game is really hard to explain to people who've had some moderate success trading (and there are plenty of those anecdotal examples out there).

But that's a great point that any kind of active trading strategy needs to be compared against the right index. I think this holds true for pension/sovereign funds which invest in multiple hedge funds as well - comparing to the overall market performance may be less relevant than comparing to sector-weighted market performance, for example.

Re: Silicon Valley Hedge Fund Takes on Wall Street with AI Trader

#83

Post by kgwgk »

SEJeff wrote: post #70
jbmorgado wrote: post #64

Earlier quoted context omitted.

I think you are willingly failing to understand what is being said by me and more people on the comments. This is not about exploiting a privileged access to market conditions (as in the sub millisecond access HFT firms have) in order to gain an advantage. This is about using machine learning to predict future (as in hours/days) moves on the market and take advantage of them.

Yes and I think you are willingly failing to understand reality from someone who has worked in technology in finance for a long time. HFT or perhaps more accurately, Electronic Trading, is more than simply passive trading and "doing something faster than everyone else". That is a part of it absolutely, but the industry also hires people with PHDs in quantum physics, or builds supercomputers at national labs to build…

> HFT or perhaps more accurately, Electronic Trading

Electronic trading as opposed to what?

Re: Silicon Valley Hedge Fund Takes on Wall Street with AI Trader

#84

Post by user5994461 »

logicallee wrote: post #25

Can you imagine an investment AI that did not have human biases. Here are some my favorite investor biases: SALIENCY bias. People remember memorable things. The guy who made $100 million by investing in a Romanian immigrant will invest in you if you're a Romanian immigrant, but not if you're one country over even if their education and politics are the same. Computers don't care. AVAILABILITY bias. People analyze dat…

> Can you imagine an investment AI that did not have human biases. Here are some my favorite investor biases:

It's actually a trivial problem. Just need to ask a few questions to determine the investor risk profile and goals, then pick the appropriate Vanguard fund.

Re: Silicon Valley Hedge Fund Takes on Wall Street with AI Trader

#85

Post by got2surf »

SEJeff wrote: post #46
Ntrails wrote: post #45

Earlier quoted context omitted.

I'd rather just try really hard to get people to understand that active trading is negative sum, and that unless (As a mom and pop investor) you are properly bench-marking against a relevant index - you're just lying to yourself. Sure HFT guys are faster than you to get short term signals and make money on the micro scale - but even ignoring that way too many people are thinking they're beating the market and they re…

You just nailed it! I work for a very large HFT and my portfolio for my 401k and extra retirement (in the market) is primarily low cost / fee vanguard index funds. You really can't beat a FPGA with tick to trade times in the milliseconds. Your optical nerve likely hasn't even processed a number changing yet.

I'm looking at low cost/fee index funds as well (I strongly agree with you that I don't want an active trading strategy for my retirement account). Have you looked at things like Motif Investing? I'm torn on whether I want to create a sector-balanced Vanguard-style index, or just invest in an existing index.

Re: Silicon Valley Hedge Fund Takes on Wall Street with AI Trader

#86

Post by bogomipz »

cortesoft wrote: post #71
bogomipz wrote: post #67

Earlier quoted context omitted.

>"Hedge funds have customers because the majority of them don't beat the market in the long run" Interesting do you have any data to look at regarding that? How do they justify their 2 and 20 then?

Well, originally the purpose was to 'hedge' your other investments. Typically, hedge funds invested in ways that would do well when the rest of the market struggled. Even if they don't best the market over the long run, they could be worthwhile investments to protect your wealth during ,Arlen downturns.

Right, they don't hedge at all now do they? Its mostly just high speed trading?

Re: Silicon Valley Hedge Fund Takes on Wall Street with AI Trader

#87

Post by SEJeff »

hendzen wrote: post #76
SEJeff wrote: post #46

Earlier quoted context omitted.

You just nailed it! I work for a very large HFT and my portfolio for my 401k and extra retirement (in the market) is primarily low cost / fee vanguard index funds. You really can't beat a FPGA with tick to trade times in the milliseconds. Your optical nerve likely hasn't even processed a number changing yet.

I'm assuming you mean nanoseconds?

Yes, but people roll their eyes when you say that even if it is true.

Re: Silicon Valley Hedge Fund Takes on Wall Street with AI Trader

#88

Post by SEJeff »

kgwgk wrote: post #83
SEJeff wrote: post #70

Earlier quoted context omitted.

Yes and I think you are willingly failing to understand reality from someone who has worked in technology in finance for a long time. HFT or perhaps more accurately, Electronic Trading, is more than simply passive trading and "doing something faster than everyone else". That is a part of it absolutely, but the industry also hires people with PHDs in quantum physics, or builds supercomputers at national labs to build…

> HFT or perhaps more accurately, Electronic Trading Electronic trading as opposed to what?

Click trading? Calling your broker and having them trade for you? Old school open outcry trading. Algorithmic Trading might be better?

Re: Silicon Valley Hedge Fund Takes on Wall Street with AI Trader

#89

Post by hendzen »

SEJeff wrote: post #87
hendzen wrote: post #76

Earlier quoted context omitted.

I'm assuming you mean nanoseconds?

Yes, but people roll their eyes when you say that even if it is true.

Fair enough. If you're not in the nanos what is the point of even bothering with FPGAs and all the pain involved? CPUs can handle single digit micros just fine.

Re: Silicon Valley Hedge Fund Takes on Wall Street with AI Trader

#90

Post by jbmorgado »

SEJeff wrote: post #70
jbmorgado wrote: post #64

Earlier quoted context omitted.

I think you are willingly failing to understand what is being said by me and more people on the comments. This is not about exploiting a privileged access to market conditions (as in the sub millisecond access HFT firms have) in order to gain an advantage. This is about using machine learning to predict future (as in hours/days) moves on the market and take advantage of them.

Yes and I think you are willingly failing to understand reality from someone who has worked in technology in finance for a long time. HFT or perhaps more accurately, Electronic Trading, is more than simply passive trading and "doing something faster than everyone else". That is a part of it absolutely, but the industry also hires people with PHDs in quantum physics, or builds supercomputers at national labs to build…

Can you do HFT without a privileged connection to the trading system that beats most of the market players in access time? No.

TL;DNR: You keep ignoring both the point of the comments and the point of the TFA. This is about market prediction, not technical exploitation of a privileged access to market.

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