Reducing market uncertainty with the adoption of Artificial Intelligence (AI) - page 2

[Rogerio Figurelli]

I was reading this news about DeepMind first commercial initiative and was thinking about what would be the impact of such Google cloud structure on stocks or even Forex market.

https://www.ft.com/content/0e099914-514a-11e9-9c76-bf4a0ce37d49

In my opinion, a great challenge to any AI product, and of course professionals and organizations, is not regarding just on supervised learning and very narrow application, like this relevant case.

And I hope at the near future see DeepMind similar experiences on trading, because here we really have the future infinity uncertainty and complexity for both, people and machines. 

Or, in other words, the real challenge to any AI solution.

[cemal]

Here is the quote from Dr. Ernest P. Chan  http://www.epchan.com/biography/  about whether  machine learning models has been proved  successful or not in quantitative trading: 

I do not find machine learning methods to be generally useful in quantitative trading. (I have explained this view in my first book Quantitative Trading.) The reason is that most machine learning methods tend to have too many parameters that need to be optimized with in-sample data. But financial time series data is actually quite limited (going high frequency doesn't help much due to the highly correlated nature of such data). So the amount of in-sample data isn't enough to overcome data snooping bias, and most machine learning models fail out-of-sample in financial time series predictions. Also, financial market suffers frequent regime changes, so few machine learning models with complicated rules can survive those changes without understanding the deeper, more fundamental patterns than only humans can detect and utilize (due to their contextual/external knowledge).

[cemal]

Comparision of some classification  models including some advanced classification  models: https://alphaarchitect.com/2018/12/21/machine-learning-classification-methods-and-factor-investing/

[cemal]

Features engineering and selection  from Dr. Ernest P. Chan :http://www.epchan.com/Machine%20Learning%20in%20Finance.pdf

[cemal]

From the same author : Optimizing Trading Strategies Without Overfitting   http://www.epchan.com/Optimizing%20Trading%20Strategies%20Without%20Overfitting.pdf

[cemal]

In the new book Advances in Financial Machine Learning by Marcos Lopez De Prado he proposes that quant  researchers utilize a different type of price bar. His research has shown that by using alternatives to fixed time interval bars (minute, hour, day, week, etc.), the return series will exhibit better statistical properties. In other words using alternative bar types, the return series will better approximate normality/stationarity which will make our research and conclusions more robust.

http://www.blackarbs.com/blog/exploring-alternative-price-bars

https://towardsdatascience.com/financial-machine-learning-part-0-bars-745897d4e4ba

[Rogerio Figurelli]

Great contributions to this thread @cemal, thank you very much.

[Rogerio Figurelli]

Just a small list of links to discussion about risks and opportunities of robots in quantitative funds, and opportunities for developers in the field, especially for those who are still skeptical about the use of AI in the market.

Billionaire Robots: Machine Learning at Renaissance Technologies
https://rctom.hbs.org/submission/billionaire-robots-machine-learning-at-renaissance-technologies/

“The Massive Hedge Fund Betting on AI”. Adam Satariano and Nishant Kumar
https://www.bloomberg.com/news/features/2017-09-27/the-massive-hedge-fund-betting-on-ai

“Renaissance Technologies Co-Founder Reveals Secrets to Quant and VC Career Success”. Dan Butcher
https://news.efinancialcareers.com/us-en/298218/renaissance-technologies-secrets-to-quant-hedge-funds-vc-career-success

The Revolutionary Way Of Using Artificial Intelligence In Hedge Funds
https://www.forbes.com/sites/bernardmarr/2019/02/15/the-revolutionary-way-of-using-artificial-intelligence-in-hedge-funds-the-case-of-aidyia/#5da632eb57ca

Million Dollar Salaries for AI Researchers? Well, we Quants Have Seen this Movie Before
https://blog.goodaudience.com/million-dollar-salaries-for-ai-researchers-well-we-quants-have-seen-this-movie-before-8e7af51f6c63

How hedge funds are using AI and machine learning
https://www.computerworlduk.com/galleries/data/how-hedge-funds-are-using-ai-machine-learning-3672971/

 

[Rogerio Figurelli]

Can AI detect emotions better than humans?
https://www.datasciencecentral.com/profiles/blogs/can-ai-detect-emotions-better-than-humans

[Rogerio Figurelli]

Forum on trading, automated trading systems and testing trading strategies

Machine learning, neural networks, deep learning : Do you find the available material on this site adequate ?

Alain Verleyen, 2018.05.13 20:29

• I don't care. Just show me the results.
• No, there no enough good articles and products available.
• No, there are some good articles but it's insufficient.
• Yes, though it could be improved.
• Yes, all what is needed is available.