Rats trained to play the forex market
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Rats trained to play the forex market
1–10 of 24 posts
Re: Rats trained to play the forex market
#2That is ratsome.
Re: Rats trained to play the forex market
#3Perhaps there is an elaborate rat society running around mazes and pressing switches somewhere in the bowels of Goldman Sachs?
Re: Rats trained to play the forex market
#4Much like the monkey throwing darts at the stock market chart who clocks professional money managers on average, this result proves nothing about rats or markets. It provides further experimental proof for the worst kept secret in history: professional money manager systematically destroy value.
Re: Rats trained to play the forex market
#5Survivorship bias explains his results.
Re: Rats trained to play the forex market
#6If you take 80 people and tell them to randomly play the stock market, buying or selling - you will always have some that succeed and some that fail over the short term.
The question is, if the same people who 'succeeded' are put back to the start again and play randomly with a new batch of 80 people - would they still rise to the top, or perhaps this time have worse luck.
Comparing this to the rats, the long term testing / new rounds with a new set of 80 rats (including the elite) would help determine whether these rats are the best, or if it was chance.
If I understand this correctly, the decision the rat makes is based solely on hearing a certain frequency (pattern of trading emerge), unfortunately even if this is the case - trading by patterns could be extremely risky without the common sense / experience of a real trader to see what is really happening to the market.
Re: Rats trained to play the forex market
#7This is the first thing I thought of when I read this:
http://dilbert.com/strips/comic/2010-07-03/?CmtOrder=Rating&...
Re: Rats trained to play the forex market
#8Re: Rats trained to play the forex market
#9If you take 80 people and tell them to randomly play the stock market, buying or selling - you will always have some that succeed and some that fail over the short term. The question is, if the same people who 'succeeded' are put back to the start again and play randomly with a new batch of 80 people - would they still rise to the top, or perhaps this time have worse luck. Comparing this to the rats, the long term te…
What the rats are doing (if this is not a well done prank) is exactly equivalent to what 'technical' traders and chartists do. As to why these techniques work; they are reacting to the intentions of other traders signaled in data. This may be a case where knowledge of the "underlying reality" that the market is reacting too (supposedly) is a disadvantage because it prevents noticing and reacting to the actual data.
That said, this whole thing reads like an elaborate practical joke.
Re: Rats trained to play the forex market
#10Much like the monkey throwing darts at the stock market chart who clocks professional money managers on average, this result proves nothing about rats or markets. It provides further experimental proof for the worst kept secret in history: professional money manager systematically destroy value.
While it is certainly true that professional money managers don't beat the market on average, this does not imply that they destroy value.
Professional money managers and speculators in general, at least in principle, more efficiently allocate capital as a result of their speculative activities. This causes overall returns to increase. In a world without money managers/other speculators, market returns would be lower overall.
The simple model: in a world without money managers/speculators, overall returns might be 2%. In a world with 1 speculator, returns might be 2.1% and that speculator might achieve returns of 4%. In a world with many speculators, they might all achieve returns of 4%, and none of them would be beating the market. They are creating value, however.
(Another reason they don't beat the market is that many of them are not trying to. The manager of my Vanguard Target Retirement 2050 fund is currently trying to beat the market. In 2040 his goal will be to minimize risk.)