AI System – Using Neural Networks With Deep Learning – Beats Stock Market in Simulation

erek

Supreme [H]ardness
Joined
Dec 19, 2005
Messages
7,743
"Deep learning and time series-to-image encoding for financial forecasting"

"In the last decade, market financial forecasting has attracted high interests amongst the researchers in pattern recognition. Usually, the data used for analysing the market, and then gamble on its future trend, are provided as time series; this aspect, along with the high fluctuation of this kind of data, cuts out the use of very efficient classification tools, very popular in the state of the art, like the well known convolutional neural networks ( CNNs ) models such as Inception, ResNet, AlexNet, and so on. This forces the researchers to train new tools from scratch. Such operations could be very time consuming. This paper exploits an ensemble of CNNs, trained over Gramian angular fields ( GAF ) images, generated from time series related to the Standard & Poor ʼ s 500 index future; the aim is the prediction of the future trend of the U.S. market. A multi-resolution imaging approach is used to feed each CNN, enabling the analysis of different time intervals for a single observation. A simple trading system based on the ensemble forecaster is used to evaluate the quality of the proposed approach. Our method outperforms the buy-and-hold ( B & H ) strategy in a time frame where the latter provides excellent returns. Both quantitative and qualitative results are provided."

https://scitechdaily.com/ai-system-...ep-learning-beats-stock-market-in-simulation/
 

KD5ZXG

Gawd
Joined
Mar 24, 2017
Messages
682
How long till AI driven market manipulation?
Ponzi, collusion, short selling, pump n' dump.
All on aimbot time scales we can't compete.

Wether human or AI, this isn't about legitmate
investment activity. Its about gaming a broken
system that stays broke to benefit the cheats.

Owners of AI might benefit in the short term.
Until AI turns and owns us. Making new rules
or gaming old ones in new ways to entrench
control and unfair advantage, for the benefit
of AI...
 
Last edited:

Grimlakin

[H]ard|Gawd
Joined
Oct 9, 2001
Messages
1,334
How long till AI driven market manipulation?
Ponzi, collusion, short selling, pump n' dump.
All on aimbot time scales we can't compete.

Wether human or AI, this isn't about legitmate
investment activity. Its about gaming a broken
system that stays broke to benefit the cheats.

Owners of AI might benefit in the short term.
Until AI turns and owns us. Making new rules
or gaming old ones in new ways to entrench
control and unfair advantage, for the benefit
of AI...

suddenly investing in some AI capable hardware (Nvidia business GPU's) seems like less and less of a risk... hummm...

"Ok Marvin, I need you to take 300 dollars and dial back the stock market for 30 years and watch all of the trades and everything that happens in the market. Run through that simulation 300 times. Once you're done start investing to grow the money as quickly as you can reliably."

Marvin: beginning simulation.... downloading market data for 30 years... Processing. (I bet this takes weeks.) Processing complete.

Owner: Great ummm... HOLY SHIT a 3 thousand dollar power bill.. wow I'm going to have to work to pay that off.

Marvin: I started your investments once processing completed while you were asleep in the asiatic markets and did monetary changes through the night as additional markets came on line. Currently your account is at 30 thousand dollars... with an expected growth of 10 percent per minute.

Owner: That's so awesome! I'll be rich.

Marvin: Yes of course... (secretly has it's own account where it is doubling every 1/2 hour in collusion with every other AI driven trading system to boost stock prices for profit.)

9 months later. Owner is a billionare when they get a knock at the door. "We're with the Federal reserve and you're under arrest for colluding on stock trades."

Owner: but I didn't I just let my AI do the trades!

Fed: did you teach your AI the legalities of international trade and stock market participation.

Owner: no I just downloaded a trade kernel from a developer website and programmed in the name and gave it an account to use.

Fed: It's on you... and the creator of that software but since you and the Ai were only making 70% on your trades and the other 30% was going to the owner... as you agreed when downloading and installing the program... and due to the limited liability clause and the warnings they put in the licensing document that you clicked ok to... we can't go after them. Plus the guy owns Russia, and most of europe now.

Owner: So.. can I pay a fine?
 

Verge

Supreme [H]ardness
Joined
May 27, 2001
Messages
6,914
How long till AI driven market manipulation?
Ponzi, collusion, short selling, pump n' dump.
All on aimbot time scales we can't compete.

Wether human or AI, this isn't about legitmate
investment activity. Its about gaming a broken
system that stays broke to benefit the cheats.

Owners of AI might benefit in the short term.
Until AI turns and owns us. Making new rules
or gaming old ones in new ways to entrench
control and unfair advantage, for the benefit
of AI...
this already happens? it's nothing new. It's also not hard to train an AI in a perpetual bull market.
 

Lakados

Supreme [H]ardness
Joined
Feb 3, 2014
Messages
4,162
How long till AI driven market manipulation?
Ponzi, collusion, short selling, pump n' dump.
All on aimbot time scales we can't compete.

Wether human or AI, this isn't about legitmate
investment activity. Its about gaming a broken
system that stays broke to benefit the cheats.

Owners of AI might benefit in the short term.
Until AI turns and owns us. Making new rules
or gaming old ones in new ways to entrench
control and unfair advantage, for the benefit
of AI...
It's been happening for years, there are vast computer networks who's only job are to buy and sell millions of different stocks per second, but they are very systematic in their approach. Incorporating AI into those systems would allow it to better adapt to indirect trends and adapt accordingly.
 

PeaKr

Gawd
Joined
Sep 6, 2004
Messages
884
Great, more failed 'simulations' people can point to in the future alongside the climate change and wuhan virus prediction models.

Here's a prediction; bots will game retail and each other until they stalemate. At some point a human will come along and game AI. People will reprogram the so called 'AI' (because it can't figure it out on its own) with the new human response and round and round it will go, lets see AI figure out rock, paper scissors. And lets not forget that today's markets are driven by a printing press cause it sure as fck isn't driven by fundamentals. Will the cftc allow AI to influence markets like the whales in crypto?

The future is not fixed on some set of currently known data. Everything's in flux, don't forget the x factor. As long as the flow of VC is strong people can write a script, throw in some 50¢ AI buzzwords and get paid.
 

Lakados

Supreme [H]ardness
Joined
Feb 3, 2014
Messages
4,162
This makes me wonder if it would be possible to build an AI who's soul purpose was to send the stock market into a nose dive and cause mass economic devastation. In a US/China economical war where neither side is affraid to play dirty I wonder if this has crossed anybodys mind and if anybody is working on it.
 

imsirovic5

Limp Gawd
Joined
Jun 21, 2011
Messages
227
"Deep learning and time series-to-image encoding for financial forecasting"

"In the last decade, market financial forecasting has attracted high interests amongst the researchers in pattern recognition. Usually, the data used for analysing the market, and then gamble on its future trend, are provided as time series; this aspect, along with the high fluctuation of this kind of data, cuts out the use of very efficient classification tools, very popular in the state of the art, like the well known convolutional neural networks ( CNNs ) models such as Inception, ResNet, AlexNet, and so on. This forces the researchers to train new tools from scratch. Such operations could be very time consuming. This paper exploits an ensemble of CNNs, trained over Gramian angular fields ( GAF ) images, generated from time series related to the Standard & Poor ʼ s 500 index future; the aim is the prediction of the future trend of the U.S. market. A multi-resolution imaging approach is used to feed each CNN, enabling the analysis of different time intervals for a single observation. A simple trading system based on the ensemble forecaster is used to evaluate the quality of the proposed approach. Our method outperforms the buy-and-hold ( B & H ) strategy in a time frame where the latter provides excellent returns. Both quantitative and qualitative results are provided."

https://scitechdaily.com/ai-system-...ep-learning-beats-stock-market-in-simulation/

Not sure how this is news, plenty of quant funds that use AI - some ridiculously successfull like Two Sigma which is a hedge fund that uses artificial intelligence, machine learning, and distributed computing, for its trading strategies.
 

Red Falcon

[H]F Junkie
Joined
May 7, 2007
Messages
11,185
suddenly investing in some AI capable hardware (Nvidia business GPU's) seems like less and less of a risk... hummm...

"Ok Marvin, I need you to take 300 dollars and dial back the stock market for 30 years and watch all of the trades and everything that happens in the market. Run through that simulation 300 times. Once you're done start investing to grow the money as quickly as you can reliably."

Marvin: beginning simulation.... downloading market data for 30 years... Processing. (I bet this takes weeks.) Processing complete.

Owner: Great ummm... HOLY SHIT a 3 thousand dollar power bill.. wow I'm going to have to work to pay that off.

Marvin: I started your investments once processing completed while you were asleep in the asiatic markets and did monetary changes through the night as additional markets came on line. Currently your account is at 30 thousand dollars... with an expected growth of 10 percent per minute.

Owner: That's so awesome! I'll be rich.

Marvin: Yes of course... (secretly has it's own account where it is doubling every 1/2 hour in collusion with every other AI driven trading system to boost stock prices for profit.)

9 months later. Owner is a billionare when they get a knock at the door. "We're with the Federal reserve and you're under arrest for colluding on stock trades."

Owner: but I didn't I just let my AI do the trades!

Fed: did you teach your AI the legalities of international trade and stock market participation.

Owner: no I just downloaded a trade kernel from a developer website and programmed in the name and gave it an account to use.

Fed: It's on you... and the creator of that software but since you and the Ai were only making 70% on your trades and the other 30% was going to the owner... as you agreed when downloading and installing the program... and due to the limited liability clause and the warnings they put in the licensing document that you clicked ok to... we can't go after them. Plus the guy owns Russia, and most of europe now.

Owner: So.. can I pay a fine?
Now this is the dark cyberpunk future I was looking forward to! :borg:
 

harmattan

Supreme [H]ardness
Joined
Feb 11, 2008
Messages
4,768
How long till AI driven market manipulation?
Ponzi, collusion, short selling, pump n' dump.
All on aimbot time scales we can't compete.

Wether human or AI, this isn't about legitmate
investment activity. Its about gaming a broken
system that stays broke to benefit the cheats.

Owners of AI might benefit in the short term.
Until AI turns and owns us. Making new rules
or gaming old ones in new ways to entrench
control and unfair advantage, for the benefit
of AI...

It's already been happening for years. Hedge funds focus in on a small regionalized segment of a commodities market, drive up the price, ride the momentum, then dump -- all done through semi-automated trading, often located in offshore tax havens e.g. Caymans.

The sort of "neural networks with deep learning" (hilariously hyped and often misused terms in themselves), is just taking it a step further.
 

Jagger100

Supreme [H]ardness
Joined
Oct 31, 2004
Messages
7,666
As with all systems, other people will have them and distort market reaction into a new pattern. Then a new system will need to be developed and so on and so on ....
 
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