I beg to differ. I see it more like the blind leading the blind. Having read through many posts over at the Quantopian community, I couldn't help but chuckle at how clueless they were about market mechanics, microstructure, and execution.
I agree, as it applies to trading. When it comes to developing software and working through different language semantics, there is nothing like receiving an workable answer to a troubleshooting question. I'll receive that gold every day.
At the time perhaps he had a point, deep learning had limitations e.g. it largely regurgitated past chess games however https://www.wired.com/2016/01/in-a-...gles-ai-beats-a-top-player-at-the-game-of-go/ last year there was a big breakthrough. Deepmind trained against itself and hit new levels of proficiency. Apply this back to chess and Kasperov would not have a chance.
Your post and comments are too technical and complex for me to understand. Are you saying AI cannot match the human mind in trading or are you saying the opposite? Thanks.
In a rush out the door so I know this is unpolished. I am confident ML/AI can outperform humans in trading soon (the elusive issue of big-data derived "context" is cracked in 2017/18 probably) however trading is not a binary win/lose result like two player chess or go. Under these circumstances and accounting for the casino market rules (if they win every game, people stop playing etc.) I believe the upper echelon of human (mostly) retail will be fine, just a little squeezed but they will adapt. The CME and others will just change the rules to regulate the "Syndrome" effect. "When everyone is super, no one will be" etc. They need a healthy market, the perception of that anyway, "financial gas-lighting" to get retail and others to play will just get better. Some token humans will pied piper in the "liquidity providers" for years. Ok maybe a bit cynical there. Slightly off my point but it applies to the <95% level retail traders also (who think they are being clever investing their own money), an interesting read. https://rpseawright.wordpress.com/2016/05/04/financial-gaslighting/
What have you (and other successful traders) discovered in your travels that augment "feeling" as it applies to being on the right side of the market?
I am saying that people need to be an integral part of trading systems using judgement and superior pattern recognition of the human brain. I think Linda Raschke has been saying this for quite a long time. Obviously back testing (data mining) makes sense. My criticism is aganst people who claim that new AI methods will improve to the point of eliminating people from trading. This is more technical but the AI hype algorithms such as neural networks (superceding human brain neurons say) are no better and less efficient than Monte Carlo simulations. I also think probability (not trying to find statistical significance that is good) is no better than computer brute force enumeration searching. Argument is that the P=NP problem is just an artifact of the wrong Turing Machine computation model. For the von Neumann MRAM (random access memory abstract machine with unit multiply) P is equal to NP or put another way there is no difference between determinstic enumeration programs and non deterministic probabilistic guessing programs, i.e. programs should use smart solution space searching using enumeration and MRAM RAM table look up something normal Turing Machines can not do. I have written a paper on this that I am trying to win the Clay Prize with "Philosophical Solution to P=?NP: P is equal to NP" (arXiv:1603:06018).