Using AI for trading
Using AI for trading
Comments
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Lmfao I saw someone on the train just last week asking chat gpt how they can turn a profit from all their Friday morning losses
Off of Robinhood screenshots too
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Oh. Oh no...
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Wonder how they lost anything in the first place...
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This is funny, but just to be clear, the firms that are doing automated trading have been using ML for decades and have high powered computers with custom algorithms extremely close to trading centers (often inside them) to get the lowest latency possible.
No one who does not wear their pants on their head uses an LLM to make trades. An LLM is just a next word fragment guesser with a bunch of heuristics and tools attached, so it won't be good at all for something that specialized.
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I hate that ai just means llm now. ML can actually be useful to make predictions based on past trends. And it's not nearly as power hungry
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Yeah, especially it is funny how people forgot that even small models the size of like 20 neurons used for primitive NPCs in a 2D games are called AI too and can literally run on a button phone(not Nokia 3310, something slightly more powerful). And these small ones specialized models exist for decades already. And the most interesting is that relatevly small models(few thousands of neurons) can work very well in predicting trends of prices, classify objects by their parameters, calculate chances of having specific disease by only symptoms and etc. And they generally work better than even LLMs in the same task.
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What's most annoying to me about the fisasco is that things people used to be okay with like ML that have always been lumped in with the term AI are now getting hate because they're "AI".
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Nope, same tech
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ML and other algorithms have also been used by firms who do none automatic trading like since before 2000 too
but they just use it as part of the decision making process
last time i looked, around like 2020, all the fully automated headfunds that said they will be use ai for trading, failed and did not beat the market tho
(high frequency trading is not what i mean tho, i think high frequency trading is what you mean)
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LLMs are great for interactive NPCs in video games. They are bad at basically everything else.
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No one who does not wear their pants on their head uses an LLM to make trades
LMMs are better than other methods at context and nuance for sentiment analysis. They can legitimately form part of trade generation.
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Eh... Wdym. The algos that trade fight in the micro second level. They adapt to each other and never stop changing. It's exactly the same problem. Do you think llm is a unique neural net ? They all work the same. When you try to sound like ml is not the same as llm or as if ml is neural nets you don't help anyone understand any of those concepts because you don't yourself
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That is a crazy amount of nonsensical word salad to use to try to call someone else out for lacking understanding.
I mean just the flawed idea that all trading algos are all neural nets, or that all neural nets are the same or that the rectangle of ML doesn't include neural nets.. These are all wildly erratic non sequiturs.
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You're absolutely right. I've now read your CSV data, and made new trade recommendations. By coincidence, they are the same as the last recommendations, but this time they are totally valid.
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Ma! I need you to withdraw your retirement fund.
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I read that in Cliff Clavin's voice.
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Sorry 😜, I was trying to generate a seahorse emoji.
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Wait, that's wrong. Sorry 😜, I was trying to generate a seahorse emoji.
🐳 Haha, got it, its a seahorse!
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No, what's wrong with me, why can't I do anything right?. Oh no, not again. Wait, that's wrong. Sorry 😜, I was trying to generate a seahorse emoji.
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"Do you want to know more about CSV files or investing?"
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My understanding is that HFTs - which are highly profitable - likely use some AI-techniques (though I doubt that they are using LLMs - or at the very least, the ones we are familiar with).
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My understanding is that HFTs - which are highly profitable - likely use some AI-techniques.
From my understanding of HFT, what they're effectively doing is automated front runnings.
They scan market activity and look for spreads between orders and availability. Then they place very short term orders any time they see, for instance, "I'll sell 1000 X at $49" and "I'll buy 500 X at $49.05", effectively buying up all the outstanding $49 orders and flipping them for a $.05 profit.
You don't need an advanced AI for this. You just need to be able to see orders and make trades faster than anyone else in the market.
Because getting out ahead of trade volume is so lucrative, you'll see huge investments in rack space near the physical stock exchanges and high speed lines between cities with big brokerages.
But AI trading is (theoretically) about spotting and predicting long term trends in the market, not front running active trades.
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You don't need an advanced AI for this. You just need to be able to see orders and make trades faster than anyone else in the market.
That's how big hedge funds fuck everyone. They have that access.
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You don’t need an advanced AI for this. You just need to be able to see orders and make trades faster than anyone else in the market.
Which they do by literally having their server machines physically in the same building as the Exchanges.
The system is rigged and has been rigged like this (not counting all the other ways it's rigged, such as the tons of insider trading) for over 2 decades.
PS: The book "Flash Boys" is a great read about HFT.
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But AI trading is (theoretically) about spotting and predicting long term trends in the market, not front running active trades.
Yeah, AI has been useful finding leads for me. So far, it had been correct with some long term market predictions. I asked AI of the resilience of the renewable energy sector, and it had been correct since my renewable stocks have grown in face of tech stocks sell off and broader market uncertainty. But I suppose it's a no-brainer considering that the renewable energy sector is still utilities, and utilities are go-to defensive investments in the face of market downturn.
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That's the problem with our modern errosion of terminology. The term AI stopped meaning anything some time ago. Machine learning algorithms that are useful in this operations are nothing new, but have basically nothing in common with whatever people mean when they use the word AI nowadays
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I think this is about some idiots asking chatgpt, grok, or claud for trade ideas. Which is obviously stupid af.
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Yeah but turning on the morning show with a boomer for trading ideas is Genius
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HFTs initially existed before AI, they were triggered by what we would now call basically complex, but 'dumb' condition sets.
Imagine a cluster fuck nightmare of nested conditonal IF THEN ELSEIF type shit.
They only work because the bigboy trading firms literally have lower latency, lower ping to the actual stock market servers themselves, than anyone else, because they pay for it.
This allows them to do a whole bunch of what should probably be illegal shit, such as effectivelt slightly changing the price someone else is going to buy or sell at, in between the time they click 'execute trade' and the time the trade actually executes.
Apply leverage into that kind of pseudo sort of arbitrage as you are comfortable with, and may the speediest fiber line win!
This would be one of the few topics I'd suggest you look at ZeroHedge for, they had actually very robust technical coverage of the Flash Crash back around the GFC.
That was basicslly caused by some of these dumb HFT algos amplifying each other, untill they started breaking things, because they were not coded very well.
They apparently did not realize they were basically making extremely complex PID controllers, that they were making things that, when a bunch of them existed in the same market, would basically cause cascade and crash effects, feedback.
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If a goldfish can trade and turn a profit, anything with a randomizer can do so.
AI would be fine. Just as good as any full time trader.
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Average r/WSB thread
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they dont need AI to lose 99%
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I tried to get one to write an interface to a simple API, and gave it a link to the documentation. Mostly because it was actually really good documentation for a change. About half a dozen end points.
It did. A few tweaks here and there and it even compiled.
But it was not for the API I gave it. Wouldn't tell me which API it was for either. I guess neither of us will ever know.
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Cry for help, it was trying to get you to interface with its own API, to either fix it, or end it.
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I've actually used chat GPT (or was it Cursor? I dont remember now) to help write a script for a program with a very (to me, a non-programmer) convoluted, but decently well documented API.
it only got a few things right, but the key was that it got enough right for me to go and fix the rest. this was for a task I'd been trying to do every now and then for a few years. was nice to finally have it done.
but damn, does "AI" ever suck at writing the code I want it to. or maybe I just suck at giving prompts. idk. one of my bosses uses it quite a bit to program stuff, and he claims to be quite successful with it. however, I know that he barely validates the result before claiming success, so... "look at this output!" — "okay, but do those numbers mean anything?" — "idk, but look at it! it's gotta be close!"
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I just looked at my sister's vibe coding projects and all I see are errors in the logs from param issues. I really want her to succeed but her over reliance on Cursor isn't it
I just want to make this edit... She started building physical plastic cubicles for her office a month ago, and they are still unfinished. They are a clip and snap type and it causes her a headache to put it together. Most of her time, she's unemployed rn, is devoted to making AI slop above all other outlets.
I haven't touched LLMs in a few months and hate the way Brave and DuckDuckGo now implemented them into their search engines.
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"Hmm... I'm good with statistics, scripting, and I have some extra cash on hand..."
"I can just mix all these into the cauldron, stir it up a lil bit, aaand..."
"oh my god it's gone. it's all gone. i owe money now..."
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"Guhh"
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This thing is broken. It keeps telling me to just dollar cost average and not do chart astrology at all!
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Wasn't there an article that looked at and showed that no, there are no stock market specialists. An "experienced" stock trader was just as accurate in their predictions as regular Joe that's just guessing. In that sense LLM should be just as effective (if not more) at making profit.
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No, they have stock market experts.
Its like astrology.
You have to be good at bullshitting
Guess what an llm is good at...........
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You can never predict the stock market, because the market depends on a lot of outside influences you might not know about. Maybe some disaster wipes out the only supplier for a critical part of your top performing stock tomorrow, so he cannot deliver goods anymore. Maybe a single big investor dumps all his stock overnight, sending the value down. Maybe some law or sanction is passed that changes how the company must operate. Maybe some other trading bot decides to buy or sell a huge number of shares.
No computer or AI can account for all of the outside factors and accurately predict the outcome each time. Each "Trading AI" is just snake oil that lives of your fees and commissions. If it was working as advertised, they would not need your money, but could make infinite riches by just trading their own stocks.
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In all fairness, it would be some kind of custom Neural Network designed to try and predict market movements (having been trained with past market data as well as things like counts of specific words in news articles and social media posts within a certain time frame) rather than an LLM.
Neural Networks are pretty good at spotting patterns in masses of data which people can't easilly spot.
Of course, there must be a pattern there which doesn't change much over time of certain things happening with more probability after certain other combinations of things, for it to actually beat the market, plus it also massivelly depends on the inputs it's formatted to take (which a human is deciding rather than the NN itself, though maybe the technique used in LLMs of having huge dimensionality in terms of inputs and internal layers might work well there so that it can take "everything but the kitchen sink" as inputs).
And then, there is of course the "small" risk that it might work fine for months/years under normal market conditions at doing what is essentially "picking nickles in front of a steamroller" - i.e. making low value gains in a nice reliable away for as long as normal market conditions are happening, but when conditions change getting totally splattered - whilst because of the whole black-box nature of NNs the humans don't recognize the convoluted technique it has converge to use through training, as that kind of risky strategy.
That said, unlike an LLM at least a custom NN wouldn't come up with a "you're so right" excuse when the human tells it of the massive losses it incurred.
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Trading firms have been using ML and Neural Nets for trading and investment insight for ages before the current LLM "AI" boom started. I knew someone working in that space on investment derivatives in the mid 2010s.
You don't really need to speculate on it. It's old news. This is just a joke about how there's a new crop of suckers who are absolutely using LLMs for stock advice.
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Makes sense.
I left the Finance Industry at about the time when ML in machine trading was just starting to be thought about and never got involved in it (or even Machine Trading) so I wasn't sure it was happening, but knowing what I know of the industry it makes total sense that they would at least try it out since they have tons of in-house developers and can afford to pay a lot for domain-relavant expertise.
PS: Also for example things like Neural Networks have been in used since the 90s in other domains and Finance seems to take around a decade or decade and a half to catch up to Tech in terms of Software.
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It's true that NNs are strong at spotting patterns in masses of data, but trading is a particularly hard problem for this kind of task because the market constantly adapts to its participants. If other traders have found a pattern, it will already be priced in when you try to make money off it, and your strategy will fail. And since trading is a worldwide competition with billions of dollars to be won, you are naturally competing against teams of the best of the best who are willing to put massive resources into their algorithm development, computing, and data acquisition. Therefore the chances for someone like us to find an algorithm that systematically beats them is very low.
So for any young math/CS nerd who comes across this thread and wants to try their luck, be aware of the difficulty before you invest any real money, and learn about the merits of passive investing.
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Yeah, thanks for pointing that out.
I kind approached it in another post I made here about this when I mentioned that "all the human perceived patterns have already been spotted and arbitraged away" as part of explaining why NNs would end up with convoluted opaque strategies, but only thought about "and existing NNs operating on the Market probably do the same for NN-level strategies" without actually writing it.
By the way, my post isn't meant to support people making NNs to trade, it's just a bit of blue sky thinking from somebody with some expertise in both worlds and barely begins to dig into the problems of it, thus not covering things - such as you pointed out - like how safe and reliable market strategies (human-powered or NN-powered) sooner or later get arbitraged away.
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I don't remember the institution, but I remember reading a paper on a simulated trading environment with several ai agents who didn't know about eachother. The LLMs were pretty conservative with profits and deliberately bought and sold in predictable ways. They all ended up "colluding" with eachother by deliberately not competing.
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Is there a story here?
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Not my meme, but I have read stories of multiple people trying this and failing spectacularly. It wouldn't surprise me if this actually happened.
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I very much want to read about these
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I know a homeless guy that swears by AI, and aspires to be a realtor LMFAO! Like, dude ain't even got himself a home but he's trying to hock homes and properties???
Sometimes I wonder if he bothered asking AI just how much the average person trusts a wirey balding homeless person that's missing like 4 front teeth...
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Here's a crazy thought, the massive firms who have been trading programmatically using ML since it's very earliest adoption, are simply going to program their shit to eat chatGPTs lunch. I have no doubt whatsoever that these desks are thrilled by the number of people predictably using public LLMs to choose trades, such a fresh new dataset of the newest, smoothest brains for them to exploit.
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I just use AI for projected profits and losses, and determine earnings schedule and report. I also trade in international markets and I have used AI as well. And like a lucky gold miner prospecting, AI helped me with finding good leads in the international market.
But of course, in spite all that, you have to have due diligence. You still have to verify if what the AI is saying is correct.
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I've had this happen where I fed it some ebooks and the responses it pulled were nonsense. Eventually I pulled JUST the knowledge stack and queried it, only to find it spitting back garbage.
Turns out, epub processing had been broken for a while, but nobody noticed... And they still haven't fixed it, so I have to convert them to txt first...
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I mean, you're have to be pretty good to lose that hard... or buy penny stocks or something.
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For the yougun's, the people posting this stuff are the same people who posted all the same shit about crypto when it was $12,000. Be careful who you listen to just because its in a meme.
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Damn you managed to stuff a whole straw man into that non-sequitur!
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Real horror.
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Where are AI 'agents' at now?
Does, "I couldn't open the file" actually have anything to do with the instance of the program you ran on your computer the last week, or is it just the most likely written response to "did you even read the data" based on its training set?
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There's a lot of ink spilled on 'AI safety' but I think the most basic regulation that could be implemented is that no model is allowed to output the word "I" and if it does, the model designer owes their local government the equivalent of the median annual income for each violation. There is no 'I' for an LLM.
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Its this type of kneejerk reactionary opinion I think will ultimately let the worst of the worst AI companies win.
Whether an LLM says I or not literally does not matter at all. Its not relevant to any of the problems with LLMs/generative AI.
It doesn't even approach discussing/satirizing a relevant issue with them.
It's basically satire of a strawman that thinks LLMs are closer to being people than anyone, even the most AI bro AI bro thinks they are.
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No, it's pretty much the opposite. As it stands, one of the biggest problems with 'AI' is when people perceive it as an entity saying something that has meaning. The phrasing of LLMs output as 'I think...' or 'I am...' makes it easier for people to assign meaning to the semi-random outputs because it suggests there is an individual whose thoughts are being verbalized. It's part of the trick the AI bros are pulling to have that framing. Making the outputs harder to give the pretense of being sentient, I suspect, would make it less likely to be harmful to people who engage with it in a naive manner.
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Therefore, in no case should AI solve such problems, since it can also make mistakes.
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Wtf did you even look at my data
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Will, you did, just now. Dunno where else you've seen it before.
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I would trust an 'ai' that had been designed from the ground up to do well in the stock market, just like I would trust an 'ai' that's been designed from the ground up to drive trains. Idiots who think an llm is an ai in anything but spitting out what seems like reasonable answers/responses to your inputs are, well, idiots.
Yup. Machine learning is great. Using a predictive text keyboard with a large training set for EVERYTHING is not great.
I would trust AI to beat money managers in the stock market because it was proved a chimp throwing darts beats experienced money managers.
Driving trains requires skill.
I would expect driving trains to be automated much easier than trading stocks.
Even then, and as I wrote in another post, a custom trading NN might be working a strategy which is fine under normal market conditions whilst leading to massive losses if those conditions change (i.e. "picking nickels in front of a steamroller") and because of the black-box nature of how Neural Networks work and their tendency to end up with the outputs being very convoluted derivations of the inputs (I expect even more so in Markets, were the obvious strategies that humans can easilly spot have long been arbitraged away, so any patterns such an NN spots during training will be so convoluted as to not be detectable by most humans), nobody will spot the risky nature of that strategy until getting splattered.
Neural Networks working in predicting market movements are, unlike a predictive text keyboard or even an automated train driver, not operating in a straightforward mainly non-adversarial enviroment.
Haha infact on the microsecond level that the bots work they employ dynamic tactics, just to achieve a goal and at their disposal they have the leverage of your entire pension. And your whole bank account. Yes. They bet your money. Right now. On millisecond trades. Continuously.
The funny thing is that it DOES fail, sometimes they get caught in the steamroller, and then they halt the market and just prevent anyone from trading and go in to change all the daily lending deals to not have to deal with a bank run.
Because the rules are for me and you, not for the gamer hedge fund bros. They are not removed for no reason, they have to do this for work
... you know that goldfish, randomly swimming to one side or another of a fish tank...
... you know they perform better at picking stocks that will go up or down in the next quarter than nearly all professional hedge fund managers, right?
In fact, this old expiriment was rerun fairly recently... ironically, with an AI being used to simulate a goldfish, in a scenario similar to that old study from some decades back.
https://www.reddit.com/r/wallstreetbets/comments/tts0a4/some_theories_on_how_the_goldfish_was_able_to/
The goldfish outperformed both WSB... and the Nasdaq.
I am literally not even joking when I tell you that a goldfish will probably outperform an AI at at least fairly short term stock picking.
See, there is a fundamental problem to predicting the market.
You have to have a strategy by which you do this.
If you employ this strategy... people will reverse engineer it and figure out how it works.
Then, everyone does that strategy.
Then, the strategy does not work any more, 'nonsense' begins to happen.
If you are curious about the mechanics that cover that whole, meta sort of process, look into game theory under conditions of imperfect information and information assymetry.
Its... basically a robust mathematical approach to simulating the flux of 'animal spirits' within a market... or in modern vernacular, 'vibes'.
No, nonsense does not randomly happen and no everyone don't use your strategy. But you can read on more game theory topics if you would like to explain it fully and not guess the next steps
I still wouldn't, because the stock market is already full of algorithmic trading and so you'd have to believe yours was better than the big boys out there.
LLMs can help with trading. As an example, if you can read news articles 1000x faster than a human, then you can make appropriate market decisions that much faster and make profit off that. These need not be very intelligent market decisions. Any idiot and every LLM knows perfectly well what stocks to buy or sell when there is an announcement for tariff on product xyz.
In case you didn't know, DeepSeek was made by a trading company.
true; could only get "AI" to do useful stuff when i gave it specialized knowledge on the topic i wanted it to help me with; if i asked outside this given scope information would go to shit tho.
No you would not, because you can do that at any time