Evolving AI to play stock market

[MillerLife]

In this you tube video AI evolves its self, so i was wondering could one create this but have it play in the stock market.

[CaptainPanic]

The stock market is already controlled by computers. Wikipedia has an article on algorithmic trading.

 

It's a small leap to include some neural networks and self-learning algorithms. I haven't found any info, but I would not be surprised if this is already the case.

[mindless]

I have been daft enough to try this. I used a computer program that used a mixture of statistical extrapolation and learning to predict prices on the Derivatives Market for several months (derivatives because you need to bet on falls and rises). It shadowed the real market and made £2 profit over the period having gambled up to £1000 per transaction many times daily.

 

The program dealt entirely with short term changes in prices (one day or less). Long term changes are due to factors outside of the data available from It would have made a very substantial profit except for the commission charged on each transaction which almost exactly equalled the profit.

 

Rule1: The banks who run the derivatives market are already running software that predicts the market and take any possibility of mechanical profit as commission. The market is really and truly being run as a casino.

 

Rule 2: The banks (who run the market) remove any profit from consistent, predictable changes as commission and so all that remains are random fluctuations.

 

So much for the short term. The longer term depends on data sources and the reliability of these sources. Reliability is the prime problem. The bank, HBOS, publicly announced that they had no exposure to sub-prime mortgage lending. Lloyds TSB truly had no exposure. So, when banking shares fell through the floor your software would buy HBOS and Lloyds TSB shares. It turned out that the directors of HBOS were lying. HBOS collapses. The directors of Lloyds TSB, egged on by the government, make a terrible error of judgement and merge with HBOS. The HBOS directors were criminals, they had already committed one fraud (lying to the public) and now committed another (lying to Lloyds). Both HBOS and Lloyds went into long term decline. (The directors of Halifax Bank Of Scotland got off Scot free despite participating a a multibillion pound fraud). Your software loses.