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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…
I mean, you’re have to be pretty good to lose that hard… or buy penny stocks or something.
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.
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.
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
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.
Do you have an example of some games that use small neural networks for their NPC AIs? I was under the impression that most video game AIs used expert systems, at least for built-in ones.
Well, for what I know, modern chess engines are relatevly small AI models that usually work by taking on input the current state of the board and then predicting the next best move. Like Stockfish. Also, there is a game called Supreme Commander 2, where it is confirmed of usage small neural models to run NPC. And, as a person that somewhat included in game development, I can say that indie game engine libgdx provides an included AI module that can be fine tuned to a needed level for running NPC decisions. And it can be scaled in any way you want.
As I understand, chess AIs are more like brute force models that take the current board and generate a tree with all possible moves from that position, then iterating on those new positions up to a certain depth (which is what the depth of the engine refers to). And while I think some might use other algorithms to “score” each position and try to keep the search to the interesting branches, that could introduce bias that would make it miss some moves that look bad but actually set up a better position, though ultimately, they do need some way to compare between different ending positions if the depth doesn’t bring them to checkmate in all paths.
So it chooses the most intelligent move it can find, but does it by essentially playing out every possible game, kinda like Dr Strange in Infinity War, except chess has a more finite set of states to search through.
Maybe. I haven’t studied modern chess engines so deeply. All I know that you either can use the brute force method that will calculate in recursion each possible move or train an AI model on existing brute force engines and it will simply guess the best possible move without actually recalculating each possible. Both scenarios work with each one having its own benefits and downsides.
But all of this is said according to my knowledge which can be incomplete, so recommend to recheck this info.
Black and white used machine learning If I recall absolutely a classic of a game highly recommend a play if you never have. Dota 2 has a machine learning based ai agent for its bots. Tho I’m unsure if those are actually in the standard game or not.
Forza and a few other racing games though out the years have used ML to various degrees.
And hello neighbor was a rather infamously bad indie game that used it.
For a topical example arc raiders used machine learning to train its AI during development. Tho it doesn’t run on the live servers to keep updating it.
For LLM examples where the wind meets is using small LLMs for its AI dialogue interactions. Which makes for very fun RP mini games.
I’m sure there’s more examples but these are what I can think of and find off Google.
They are the same.
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”.
What’s worse is that management conflates the two all the time, and whenever i give the outputs of my own ML algorithm, they think that it’s an LLM output. and then they ask me to just ask chat gpt to do any damn thing that i would usually do myself, or feed into my ml to predict.
? If you make and work with ml you are in a field of research. It’s not a technology that you “use”. And if you give the output of your “ml” then that is exactly identical to an llm output. They don’t conflate anything. Chat gpt is also the output of “ml”
when i say the output of my ml, i mean, i give the prediction and confidence score. for instance, if there’s a process that has a high probability of being late based on the inputs, I’ll say it’ll be late, with the confidence. that’s completely different from feeding the figures into a gpt and saying whatever the llm will say.
and when i say “ml” i mean a model I trained on specific data to do a very specific thing. there’s no prompting, and no chatlike output. it’s not a language model
Nope, same tech
Which crayon color has the best flavor?
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)
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.
LLMs are great for interactive NPCs in video games. They are bad at basically everything else.
The best use I’ve gotten out of GPT is troubleshooting Rimworld mod list errors, often I’ll slap the error in and it’ll tell me exactly which mod is the issue, even when it can’t the info I get back narrows it down to 4 or 5 suspects
The investors must be very proud.
I know right? Billions of dollars for rimworld tech help. Though it understands that far better than the time I tried to see if it knew GURPS, it was hilariously bad at mechanics, did give me an interesting skill idea I hadn’t considered for my isekaid wizard, turns out the Teaching skill is really important when the game becomes about starting a wizard school
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
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.
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.
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.
… 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.
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
No you would not, because you can do that at any time
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 bitches for no reason, they have to do this for work
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.
Sorry 😜, I was trying to generate a seahorse emoji.
🐬 There we go, a seahorse!
Wait, that’s wrong. Sorry 😜, I was trying to generate a seahorse emoji.
🐳 Haha, got it, its a seahorse!
Oh no, not again. Wait, that’s wrong. Sorry 😜, I was trying to generate a seahorse emoji.
🐙 I finally did it! Seahorse achieved!
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.
When people say they use AI for stock trading, they don’t mean LLMs. There are stock AI models that have existed long before LLMs
i bet you some do!
Good catch… lol
they would blow up their accounts real quick
I bet you some do!
Except exactly nobody calls those “AI”… So no
“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…”
“Guhh”
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.
Ma! I need you to withdraw your retirement fund.
I read that in Cliff Clavin’s voice.
Average r/WSB thread
they dont need AI to lose 99%
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
Oh. Oh no…
Wonder how they lost anything in the first place…
“Do you want to know more about CSV files or investing?”
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.
Cry for help, it was trying to get you to interface with its own API, to either fix it, or end it.
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!”
This thing is broken. It keeps telling me to just dollar cost average and not do chart astrology at all!
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.)
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.
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.
Idk if I’d say they “fuck everyone” given how much of the market is already heavily concentrated in a handful of hedge funds and investment banks. Most people don’t have real exposure to the stock market. And of those who do, most don’t indulge in active trading - they have savings in a 401k that maps to an index fund or other basket of blue chips, updating on daily or quarterly cycle.
The folks the HFT really fuck over are the day traders and investment bankers who are, themselves, trying to rapidly reposition ahead of market data. Warren Buffet’s Berkshire team loses more to HFTers in a day than any lay citizen would lose in a lifetime.
Institutional Investors (such as Pension Funds) and Retail are the ones getting properly fleeced in present day markets.
Retail might have started to get wise on it (frankly I don’t know for sure if that’s the case, as Retail tend to be either naive amateurs or deluded fools, so I’m just trusting what you said on this), but when it comes to Pension Funds people only figure out they’ve been fucked decades later when they try and cash their pensions and it’s a lot more difficult to tease away how it happened when all the money is pretty much in an investment black-box than it is from watching a handful of stocks and ETFs one has invested directly in.
Are you saying that if you had that access, then you could beat all the big hedge funds? Because… no… you couldn’t.
Uhh… what? What are you taking about?
Well sure, if you were a multi billion dollar hedge fund with an experienced staff and insider connections to market makers, with a powerful algorithmic trading apparatus, you’d be kicking the shit out of random dipshits on the internet. No use denying it!
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.
The system is rigged and has been rigged like this
It’s rigged against day traders. But you can still get by just fine as a value or growth style investor who is seeking long term ROI. You’re just a sucker if you think you can outplay the machines minute-by-minute.
PS: The book “Flash Boys” is a great reading about HFT.
Michael Lewis was the GOAT back then. Shame he parlayed his fame into FTX infamy.
Hft aren’t just taking from day traders. They profit from all transactions. Your 401k is bled a fraction of a percent every day by hfts that take a cut before the Index fund or Mutual fund makes its daily rebalance.
Your 401k is bled a fraction of a percent every day by hfts
Every month, maybe. These big portfolio funds aren’t rebalancing at that frequency or scale. They’re relatively static and conservatively positioned.
They rebalance continuously. If they waited until the end of the month it would be billions that would be impossible to rebalance without distorting the trades they’re trying to execute.
Even if they waited it wouldn’t matter .001% of $1 billion a month is the same as .001% of $333m daily.
They rebalance continuously.
On the margins. You’re not seeing the whole portfolio turn over day by day.
Even if they waited it wouldn’t matter .001% of $1 billion a month is the same as .001% of $333m daily.
Which 401k is flipping $333M of balance sheet every day?
Also, how many days do you think are in a month?
Personally I went into Gold for long term ROI (though that’s pretty much a bet on in the long term there being crisis with the currencies themselves) since even ETFs and other spread investment stock strategies are still affected by Market manias and their aftermaths which can be triggered by HFTs (which at times create positive-feedback loops that turn into market runs).
That said, I was in the Industries that got hit hardest in the latest 2 major crashes (Tech in 2000, Finance in 2008) - to the point of being with Lehman Brothers in 2008 when they went bankrupt - as well as in Britain when they voted to Brexit (which tanked the pound, something which, by the way, this strategy protected me against), plus being in the Finance Industry is a bit like working in a sausage-making factory (once you see how sausages are made, you never want to eat one again) so I have a good excuse for having a “trust nothing” ultra-conservative savings protection strategy 🤪
Gold has never been good long term roi. It’s an inflation hedge. (I bought gold in the 1980’s).
Yeah, Gold doesn’t go up, rather it’s currencies that go down in value so you need more tokens of a currency to buy the same amount of Gold.
It’s mainly a protection against large economic upheaval, which is why I called it a “savings protection strategy”. Gold bought at the 1980 peak (the worst possible point since the end of the Gold Standard) is right now worth 8x more nominally in USD, though only about 2x if you discount inflation (as 1$ from 1980 is $3.93 in today’s money).
I suspect that what you thing is “long term” is not the same as what I think as “long term”.
More broadly, Gold’s long term ROI depends on which currency you’re comparing it with - it tends to be amazing in currencies like the Rupee because India’s policies are shit and the currency devaluates a lot, less so in currencies like the US Dollar or the Deutsche Mark/Euro. This is why it tends to be a traditional strategy in poorer countries which traditionally had more unstable economies, like India and China.
I myself bough gold near the local maximum in 2012 only to see its value stagnate for almost a decade (see graphic), so I just sat on it and now it’s worth almost 4.5x as much in nominal terms in the currency I bought it with (British Pounds) because, IMHO, the structural problems of the Economy and Financial system that led to the 2008 Crash were never actually solved by Central Banks and Governments in the West, plus there are a whole lot of related Social and Societal problems making the societies themselves less stable (which is why, Britain had Brexit and the US has Trump).
Gold is a punt on the instability of the current Economic and Financial structures in the West and on the ineptitude and even corruption of its politicians, as well as the expected upheavals from the transition from the Era Of America to the Era Of China, and it’s one I’m doing with an horizon of decades.
It can easilly be beaten by active trading strategies, but so far for me has worked fine as just a way to park my savings, kinda like in the old days - from the 40s to to maybe the 80s - buying stocks from large well established companies (say, GE) and getting a stead income from it in the form of dividends was a good way to park savings.
Personally I went into Gold for long term ROI
:-/
That’s certainly a strategy.
That said, I was in the Industries that got hit hardest in the latest 2 major crashes (Tech in 2000, Finance in 2008) - to the point of being with Lehman Brothers in 2008 when they went bankrupt - as well as in Britain when they voted to Brexit (which tanked the pound, something which, by the way, this strategy protected me against), plus being in the Finance Industry is a bit like working in a sausage-making factory (once you see how sausages are made, you never want to eat one again) so I have a good excuse for having a “trust nothing” ultra-conservative savings protection strategy 🤪
I’ll say that I was working O&G in 2020 when the spot price of a barrel went negative. My own firm dropped in price from mid double digits to single digits, and I bought every share I could get my hands on, knowing they could liquidate tomorrow for multiple of their market cap.
If you’re that much of an insider, I can’t imagine why you’d bother being conservative. Seems like you’ve got a ton of valuable info to trade against.
I left the industry almost a decade ago and was never a business guy: I just made software for the business (specifically Frontoffice development).
I literally put my savings in Gold and pretty much didn’t touch it for over a decade.
Amongst other things that position saved me from the hit on the British Pound after the Leave vote (and decay since) as the savings that went into it were originally in Pounds.
I wouldn’t call it an “investment strategy”, more of a “safe long-term parking strategy”.
Since the question was about how to protect oneself of the upheavals in the US, its system and its Economy, I pitched my “safe parking” strategy as a possible answer that’s very passive (certainly the way I did it).
I literally put my savings in Gold and pretty much didn’t touch it for over a decade.
Putting money in an appreciating savings account is a great way to earn passive income. But gold did not outperform the S&P 500 until this last year, and even then only barely. For a whole host of reasons, commodities are a highly speculative and historically underperforming asset class.
I wouldn’t call it an “investment strategy”, more of a “safe long-term parking strategy”.
I mean, long term savings is long term savings. Unless you’re keeping it in straight cash (historically one of the worst moves you can make) you’re still making some kind of investment decision.
Since the question was about how to protect oneself of the upheavals in the US
The answer there tends to be utilities and treasuries. Gold, as a commodity safe haven, is still heavily predicated on the easy credit afforded by its buyers. Utilities, by contrast, tend to have inelastic demand and so continue to enjoy high cash flow (and high dividends) as the rest of the industry contracts. And treasuries pay a fixed rate, guaranteeing future returns for the life of the note.
Gold is still speculative relative to the demand for trade on the market. So you can see sudden spikes in price in the time period around a crash. But there’s no incentive to hold it long term, as there’s no revenue generation behind owning a yellow rock. You’ll see high volatility, not a high rate of return, long term.
Because they know that someone is going to be more clever than them, faster than them, at some point, if they keep trying to do inside moves.
And also because they know that at some point, because of everyone trying to be cleverer and faster than everyone else… one day this is all going to blow up, and all the various kinds of leverage will unwind, and work backwards.
They didn’t say they went 100% into gold, just thst they have a solid chunk in it, as a safety margin / defensive play.
Gold, on the other hand… much, much simpler, in the long term.
Generally less ROI than during a Bull run in the market, but it does always go up, in the long run… beats inflation!
If you see massive volatility in gold, that means some fairly big entities are … rearranging their bets, so to speak.
On that note, here’s the DJIA / Gold:
Trump’s been great for Gold prices, Gold’s gone up more than the stock market has, in his term so far.
Gold’s gone up more than the stock market has, in his term so far.
:-/
That’s a lot of hedging
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.
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
I think this is about some idiots asking chatgpt, grok, or claud for trade ideas. Which is obviously stupid af.
Yeah but turning on the morning show with a boomer for trading ideas is Genius
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.
