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| Tokyo Stock Exchange via Dick Johnson |
Stock trading. Many people come together at different stock exchanges solely to try their best at buying low and selling high. Stock markets have been in business for approximately eight centuries. Everything was done by hand for the longest time. The process of making computations and very educated guesses was tedious and only meant for the serious mathematicians. Algorithms came in handy, but could still prove slow and imprecise.
The idea of programming an artificial neural network has been a work-in-progress for the past several decades. However, it failed to gain real traction before the introduction of the modern computer. Now that computer processors are faster and more efficient while computing many numbers, stock experts are beginning to try and figure out the best method of implementing neural networks that will work to their advantage. By using networks like those, computers can be "taught" to function similarly to the human brain in stock market scenarios, except with a much greater advantage. For instance, the following statement describes the Neural Fair Value (NFV) System:
"The Neural model is based on "Neural Networks" theory, an artificial intelligence concept designed to replicate the human brain's ability to learn. During a neural model's training period, prediction errors are reduced by adjusting inputs." (via Neuroshell)
Neural networks would be able to "learn" from the past much like a human would, but in a much more efficient process. This includes mistakes or successful results from past problems. By doing this, neural networks can adapt and better predict stock fluctuations.
Sounds like neural networks will be incredibly useful in the future of stock trading. However, the development and research going into them is constantly ongoing - no perfect algorithms have been developed quite yet.
* http://www.neuroshell.com/Successful%20Trading%20Using%20Artificial%20Intelligence.pdf
* http://www.neuroshell.com/traders.asp?task=interviews&id=19
* http://www.f.kth.se/~f98-kny/thesis.pdf
* http://www.businessweek.com/stories/2006-05-07/a-neural-approach-to-the-marketbusinessweek-business-news-stock-market-and-financial-advice
Hi Joshua,
ReplyDeleteNice to see you here.
To be frank, I am a layman in stock trading.
Artificial intelligence is a hot topic in scientific areas. It is being used in many fields like machine learning and natural language processing. In many departments like Computer Science and Mathematics, it is a required course. I knew it because I took one course last semester. It is really an useful and amazing tool for modern science. The development of computers is pushing scientists to do more research on this area.
Now, I know it can be used stock trading. It is absolutely informative to me. I will do more search about artificial intelligence because I want to be a rich woman. Ha-ha. Just kidding. I like artificial intelligence. Next semester, I want to take the course.
Anyway, thanks for your post. Artificial intelligence is especially beautiful from this angle.
In sum, it is a good post.
Hi Josh,
ReplyDeleteGreat post on Artificial Intelligence. There are so many topics to write about when it comes to AI, but this one is particularly interesting. The introduction of neural networks to make predictions changed the whole game of the stock market. I can't even imagine how they did it back then by hand. Good use of links at the end of your post for extra reading pleasure.