Earlier quoted context omitted.
hovering over the link to see the status bar url is probably easier
Then remove the misleading URL stub entirely.
But the existence of the stub indicates an external link instead of a job posting, AskYC, or poll.
Training Rats as Traders
31–40 of 44 posts
Re: Training Rats as Traders
#32My first thought was, is it April 1st already? "Since I did not want to make it too complicated, I only used the USD/EUR future to make the rats experts in this specific market segment, but other rats can be trained in other markets as well. I trained the rats for about 3 months, starting with 80 Sprague Dawley laboratory rats, 40 males and 40 females with the intention to cross the best of them to genetically create…
Considering the rest of the website, this is probably social commentary, not a real experiment...
It's clearly not a real experiment. The social commentary angle is interesting, although personally I'd tend to lean more toward elaborate hoax. The only thing I don't understand is why it has so many votes. It's not like it's at all insightful or illuminating when viewed as a thought experiment, so people must just be falling for it.
Re: Training Rats as Traders
#33Well Keith Chen @ yale showed that capuchin monkeys show the same fundamental behavior as humans. By the end, they were trading jello beans for sex and creating their own bubble economy. http://tinyurl.com/au5hq
Comment from a buddy of mine Kartik, that I figured I'd share with the thread.
Re: Training Rats as Traders
#34Well Keith Chen @ yale showed that capuchin monkeys show the same fundamental behavior as humans. By the end, they were trading jello beans for sex and creating their own bubble economy. http://tinyurl.com/au5hq Comment from a buddy of mine Kartik, that I figured I'd share with the thread.
Cool article, maybe you should submit it. There was a similar article some months ago, but it seems to have gone unnoticed:
http://news.ycombinator.com/item?id=248613
The NYT article you cited is way better, although I don't think there's much that one can say about either of them.
Re: Training Rats as Traders
#35A neural network, whether software-based, hardware-based, or wet-ware based (rat in this case, or human for that matter), can only spot patterns in a given set of data which are there. No patterns in the data means no predictability. You can have the coolest, most hyper-intelligent system ever devised, but that cannot see patterns which do not exist. Of course market data has patterns (sell on Friday, for instance), but it is always limited. Generally, I think you could even in principle never get more than 80% accuracy with any kind of neural network, because of the lack of complete patterns in market data, whether we are talking about a rat or a human or a whatever kind of neural network. Which brings me to a second point, since 100% accuracy or anywhere near that is not possible even in principle, applying electric shocks to test subjects when they are wrong is simply cruel and irresponsible.
Re: Training Rats as Traders
#36Earlier quoted context omitted.
Percentages rather than dollars are worthless. There are skewed bets; you can predict "up" rightly 70% of the time and lose money on the bigger downward 30% of the movements.
Be that as it may, if the rats cannot do better than a coin toss, what use is it?
Your response indicates that you did not understand the parent post.
Assume I have some system where I guess right only 25% of the time, but if I guess right I get $5. If I guess wrong I lose $1. My expected return is (0.25 * 5 - 0.75 * 1) = 0.5, which is 50 cents.
So, I'm doing worse than a coin toss, but still making money.
This is what the parent poster meant by a "skewed bet". The payoff for guessing "heads" or "tails" is not the same.
You can't just look at the results of the coin toss (correct guess, incorrect guess). You also have to look at how much you get paid for a correct guess, and how much you lose for an incorrect guess.
In most real-life situations, the payoff is not symmetric (equal win and loss amounts). This is why your "if you can't beat a coin-toss" comment is meaningless (and usually incorrect).
Re: Training Rats as Traders
#37Essentially, he made a more complicated version of a moving average quant system. The more interesting part was breeding top-performing rats to see if they are able to improve their "trading" genetically. You can do this exact same thing using evolutionary algorithms with trading systems that help you to adapt to the market. Quant finance is fun when you're doing it for yourself, not a bank.
I'm not sure that what you say is right. What makes you think that it's the same?
He assigned pitches to how fast the market was moving, and trained the rats on those pitches. The speed of the market can be measured using averages.
Re: Training Rats as Traders
#38Earlier quoted context omitted.
I'm not sure that what you say is right. What makes you think that it's the same?
He assigned pitches to how fast the market was moving, and trained the rats on those pitches. The speed of the market can be measured using averages.
Obviously a positive return cannot be made from moving averages. But how do you know that the rats don't develop some sort of intuition that can make a positive return?
Re: Training Rats as Traders
#39Earlier quoted context omitted.
He assigned pitches to how fast the market was moving, and trained the rats on those pitches. The speed of the market can be measured using averages.
Obviously a positive return cannot be made from moving averages. But how do you know that the rats don't develop some sort of intuition that can make a positive return?
First, moving averages do play a role in some (profitable) quant systems.
Second, I never said that the rats couldn't create a positive return, but you could model the rats behavior quantitatively and develop a system, but that's just bringing it back full circle.
Re: Training Rats as Traders
#40Earlier quoted context omitted.
Be that as it may, if the rats cannot do better than a coin toss, what use is it?
Your response indicates that you did not understand the parent post. Assume I have some system where I guess right only 25% of the time, but if I guess right I get $5. If I guess wrong I lose $1. My expected return is (0.25 * 5 - 0.75 * 1) = 0.5, which is 50 cents. So, I'm doing worse than a coin toss, but still making money. This is what the parent poster meant by a "skewed bet". The payoff for guessing "heads" or "…
I still don't get it:
A. I guess correctly 25% of the time (via some method) and make money because of the skewed payoff. (0.25 * 5 - 0.75 * 1) = 0.5
B. I flip a coin and guess correctly 50% of time and make EVEN MORE money because of the skewed payoff. (0.5 * 5 - 0.5 * 1) = 2
Why should I ever go with option A?
Furthermore if your method lets you guess correctly 25% of the time, why don't you simply make the opposite trade and now you are guessing correctly 75% of the time!
Are we are talking about something fundamentally non-binomial? (buy, sell and do nothing or something even more complicated?)