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Show HN: Watch 3 AIs compete in real-time stock trading

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Re: Show HN: Watch 3 AIs compete in real-time stock trading

#171

Post by chronic73940581 »

Galanwe wrote: post #101
chronic026935 wrote: post #76

Earlier quoted context omitted.

> or just a stocktrader haha Many quant trading firms make 50%-100% annual returns, each year, over the past 15-20 years. The secret is leverage. And they do not accept outside investor money. Many hedge funds outperform the market. However, the returns after fees, to the passive outside investor underperform S&P500. But yes, publicly traded active ETFs generally underperform. But counter example is VGT or QQQ, both…

> Many quant trading firms make 50%-100% annual returns. The secret is leverage Hu lol no XD you're way over stating it. While it happens _sometimes_, 50% or 100% is insanely rare, even for the top tier hedge funds. Most HF work at predefined annual volatility, often in the 7% to 10% range. A typical _top tier_ sharpe is in the >=2 range, we're more talking about a 10%/25% averaged annual returns. > However, the retu…

> A typical _top tier_ sharpe is in the >=2 range, we're more talking about a 10%/25% averaged annual returns.

High-frequency low latency trading: Sharpe 10 or higher

Mid-frequency low latency trading: sharpe 4 to 5

Hedge fund statistical arbitrage: sharpe 1 to 2

Hedge fund long/short, event driven, global macro, etc: sharpe 0 to 1

And yes, HFT and MFT scales to billions in annual PnL for single firms.

There’s a reason quant HFT firms pay the most, and are ranked above OpenAI in pay and prestige. Hedge funds are tier 2 in comparison but not bad either.

Re: Show HN: Watch 3 AIs compete in real-time stock trading

#172

Post by jhghikvhu »

sdwr wrote: post #146
mvdtnz wrote: post #129

Earlier quoted context omitted.

If you believe (as many HNers do, although certainly not me) that LLMs have intelligence and awareness then you necessarily must also believe that the LLM is lying (call it hallucinating if you want).

Intelligence is a prerequisite for lying, but its foundation is morality and agency. To lie, you have to know that you are not telling the truth, and arguably have to be able to held accountable for that action. It's easy to babble a series of untruths, but lying requires intention, which requires an entity that can be recognized as having intentions. I'd argue that ChatGPT's lack of a cohesive self prevents it from…

If you ask chatgpt to tell a story of a liar it is able to do so. So while it doesn't have a motivated self to lie for it can imagine a motivated other to project the lie on.

Re: Show HN: Watch 3 AIs compete in real-time stock trading

#173

Post by jhghikvhu »

WalterBright wrote: post #110
pavlov wrote: post #98

Earlier quoted context omitted.

ChatGPT does a good job of imitating the average crypto influencer. They don’t know what they’re saying either, and 99% of crypto investors would be thrilled by the prospect of a “pivotal Phase 3 Bitcoin ETF trial” that will “drive trust value realization”. Sounds great, can’t miss out on that! The hallucinations are simply a mirror of a community that thrives on this nonsense. When nothing is real, you can’t blame t…

When I'd watch the financial news on TV, they would always bring on the "technical analyst", show a graph of the stock price, and then hand-draw some lines on it, and then spew out various technical terms for it guaranteed to impress. Me, I always regarded technical analysis as drawing pictures in clouds. If any of those analysts were worth spit, they'd be working for a hedge fund, not the network.

There is something to technical analysis. But you do need to approach it rationally rather than by performing magical rituals.

The markets are made of a finite and sometimes very small number of participants that may have their own reasons for buying and selling unrelated to company performance. Figuring out what they will do is the basis.

Maybe Bob is looking to sell a lot to free up cash for private jet. Maybe Alice buys every month the same day like clockwork as she gets her paycheck. Maybe Charlie thinks the stock can't go about $50 and will take profits at $49. Maybe Debbie regrets not buying and is likely to fomo buy soon.

Probably can't figure this out one by one, but can in aggregate.

Re: Show HN: Watch 3 AIs compete in real-time stock trading

#175

Post by chronic73940581 »

Galanwe wrote: post #106
Scoundreller wrote: post #92

Earlier quoted context omitted.

Wouldn’t it be fairer to compare against a leveraged ETF? TQQQ (3x daily return leveraged nasdaq 100) is up 180x since its well-timed inception in 2010. Though that’s a bit over 40% annually.

> Wouldn’t it be fairer to compare against a leveraged ETF? No, it's actually the reverse. You have to compare at equal annual vol, and the S&P already has something like 20%. Most HF operate around 10% on AUM.

> No, it's actually the reverse. You have to compare at equal annual vol, and the S&P already has something like 20%.

Stop thinking like a hedge fund.

TQQQ commonly is used as a benchmark because it represents a low-friction, practical alternative to VTI, VOO, and even private equity investments including hedge funds trading public securities.

Once your Sharpe is high enough, you stop caring about volatility. The only volatility is how many zeros in your almost-always positive PnL.

Hedge funds (and traditional asset managers) care about drawdown, vol, sortino, beta and all that shit. But hedge funds have a different business model than prop trading firms.

Re: Show HN: Watch 3 AIs compete in real-time stock trading

#176

Post by fatata123 »

jhghikvhu wrote: post #172
sdwr wrote: post #146

Earlier quoted context omitted.

Intelligence is a prerequisite for lying, but its foundation is morality and agency. To lie, you have to know that you are not telling the truth, and arguably have to be able to held accountable for that action. It's easy to babble a series of untruths, but lying requires intention, which requires an entity that can be recognized as having intentions. I'd argue that ChatGPT's lack of a cohesive self prevents it from…

If you ask chatgpt to tell a story of a liar it is able to do so. So while it doesn't have a motivated self to lie for it can imagine a motivated other to project the lie on.

[dead]

Re: Show HN: Watch 3 AIs compete in real-time stock trading

#177

Post by chronic73940581 »

WalterBright wrote: post #112
maximus-decimus wrote: post #83

Earlier quoted context omitted.

The problem with looking at which funds over-perform is they just close the funds that under-perform so all the existing ones over-perform... by the sheer power of survivorship bias.

Past performance is no predictor of future returns.

> Past performance is no predictor of future returns

False. Why do people invest in real estate and S&P500 passive index funds?

Because historically they go up.

Re: Show HN: Watch 3 AIs compete in real-time stock trading

#178

Post by chronic73940581 »

WalterBright wrote: post #113
rufus_foreman wrote: post #105

Earlier quoted context omitted.

>> Many quant trading firms make 50%-100% annual returns, each year, over the past 15-20 years 100% annual returns on 1 million dollars for 20 years is 1 trillion dollars. No one is making that type of return.

Why it's worth paying attention in math class.

> Why it’s worth paying attention in math class.

Math class does not teach practical knowledge such as personal finance or health.

Citadel returns since 1990 is 38% annual returns before fees to outside investors. They have a 5:50 fee structure. There are hundreds of more firms, staying out of the public eye.

https://www.barrons.com/articles/multistrategy-hedge-funds-p...

Minimum investment $5M. Sorry but the middle class is not allowed.

Re: Show HN: Watch 3 AIs compete in real-time stock trading

#179

Post by chronic73940581 »

rufus_foreman wrote: post #105
chronic026935 wrote: post #76

Earlier quoted context omitted.

> or just a stocktrader haha Many quant trading firms make 50%-100% annual returns, each year, over the past 15-20 years. The secret is leverage. And they do not accept outside investor money. Many hedge funds outperform the market. However, the returns after fees, to the passive outside investor underperform S&P500. But yes, publicly traded active ETFs generally underperform. But counter example is VGT or QQQ, both…

>> Many quant trading firms make 50%-100% annual returns, each year, over the past 15-20 years 100% annual returns on 1 million dollars for 20 years is 1 trillion dollars. No one is making that type of return.

> No one is making that type of return.

Classic passive ETF Boglehead mindset.

Who said anything about re-investing? There are also significant tax considerations (loopholes) that encourage cashing out annually.

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