The Online Investing AI Blog

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Humans can do a lot of things better than computers–but that list is shrinking.

Once, investing and trading solely belonged to humans. Computers were number-crunching machines that helped investors and traders make decisions.

Then, algorithmic trading came along. Trading strategies designed and maintained by computers saw more and more action in the market. Although,there were always people nearby monitoring those trades.

Now, computers have taken another step toward mastering the market.

At a recent conference in Barcelona, Spain researchers released their findings that showed computer model trading agents beat human traders and other computer trading systems.

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Here at Online Investing AI, we are dedicated to using new technology to develop Automated Trading systems. But there is one small problem with a purely programming approach. It does not allow us to leverage off the best trading strategies that people have already developed. That’s where you come in.

Are you a successful trader? Are you looking for ways of using new technology and Artificial Intelligence to improve your trading strategies? If the answer is yes, then we are looking for you.

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I just finished reading Automatic Quantum Computer Programming and it really got me thinking about the possibilities and promise of quantum computers. For those unawares, quantum computers have the potential to revolutionize our lives as much as the digital computer has. Why? Because they can solve problems that digital computers cannot solve.

How do they do it?

Quantum computers use the characteristics built into the quantum world such as superposition and entanglement to solve these difficult problems. In an ol’ skool digital computer, each bit can only have a value of 0 or 1. However, in a quantum computer, a single quantum bit can have a value of both 0 and 1, at the same time. This is stored as a probability of being a 0 or a 1. So, while the computer that you are reading this on can only store one piece of information in a single bit, a quantum computer can store much more information in a single quantum bit. This powerful ability is known as superposition.

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Whether it’s under the guise of high frequency trading or algorithmic trading or quant trading, advanced technology is becoming more accepted and implemented.

This technology includes artificial intelligence and machine learning.

There’s a good chance it’s trading at least a portion of your money right now.

Is this a good thing? Yes.

Is this a bad thing? Yes.

Could it be bad and good all at the same time? You bet.

The most important thing is be prepared for this revolution in finance. Here are a few ways to be prepared for artificial intelligence in finance.

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Pic from New York Times

I’m convinced that the world is either going to hell in a handbasket, or is pivoting toward the exponential growth of a technological singularity.

What’s the source of this paradox?

I recently looked at the creation of synthetic life that could, on one hand be used to create fuel sources and medicine, or unleash an uncontrollable disease.

Then, as if I needed a more perfect example, there’s this story in the New York Times about the latest types of vending machines.

In Tokyo, you can find vending machines that use electronic eyes to evaluate skin to determine if the customer is old enough to buy tobacco. In Canada, you can apparently find vending machines with flat irons for hair.

Now, in a luxury hotel, you can shell out $1,000 for gold bars and coins.

Here are some other examples:

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Dr. Frankenstein was in the wrong business.

While Craig Venter can now lay claim to being the first person to create artificial life, he’s not interested in bolting together a monster. He’s looking to make monster money.

Last week, Venter announced that he had created life using manmade DNA. It’s often referred to as synthetic life.

This was a 15 year mission for Venter.

The announcement is stunning. What the technology could lead to is stunning in the trillion dollar level.

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I first connected with Nick at Becoming Capitalist through this blog. When I read his intro, I liked the way Nick thought. He sees artificial intelligence and automated-algorithmic trading as a way to tap technology for personal financial freedom. We call that the Wealth Singularity. I’ve been reading Nick’s blog and communicating via email. I’m pretty impressed and thought you might want to see an Expert Profile on what Nick is up to and how he approaches automated trading.

What attracted you to automated or algorithmic trading? Why is this so important to you?

The attraction for me to automated trading was driven by the same desires I had getting into IT and software development. When I see a problem or a set of work, I look for ways to automate it and streamline it. And then of course I have a computer do it. This really provides endless satisfaction. Those who build or create anything understand the feeling of joy when there creation is finally complete.

For the programmer, this joy can be ongoing. Unlike a machine, once you’ve coded something it will execute perfectly again and again; never again requiring your input. I suppose the objective in trading then is for your AI to become a version of you without your bad qualities. No emotion, never tires, hungers, or needs a break, and can multi-task in ways you could only dream of.

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One of the great things about this blog is meeting super-smart people. Chenghui Cai is one of those people. He’s also a nice guy, too! Chenghui is a quantitative researcher and the founder of AI Trading.org. It’s a great resource for people exploring machine learning, algorithmic trading, and automated trading. In 2007, Chenghui won third place in a Interactive Brokers trading competition. The system he developed for the competition gained over 40 percent in two months. (I’d take that!) I asked Chenghui to give us some insights on algorithmic trading and its future. If you’re interested in learning about what role AI (artificial intelligence) will play in finance, you’ll want to read on…

Online Investing AI: Where do you think Automated Trading is Heading?

Chenghui: Maybe later, we can discuss other topics, but first let me share some of my personal opinions on the big question: “Where do you think the future of Automated Trading is headed. Ben and other folks have very good points.(Editor’s note: you can read Ben Gimpert’s expert profile here and Jez Liberty’s profile here.)

I will tackle the question in a different angle. Actually, this question is too big for anyone, of course including me, to be 100 percent correct. I am a big fan of artificial intelligence (AI) which is a technology including machine learning, decision making under uncertainty, and other interesting approaches. I deeply believe that AI is the core of all technologies. Science, e.g., math, physics and biology, is a different story from technologies. It is so funny that AI is in fact a product of different sciences.

Assume that there is an autonomous agent/robot that is able to make decisions like human being through its abilities to learn, infer and create by simulating human being, and its computation power that human being is not comparable to. Then this agent is so-called of general AI. It can do anything that other technologies can achieve. That is why I believe AI is the core of all technologies. Put it simple, AI rather than other technologies is the core, because it is about intelligence that differs us from the rest of the world.

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jurvetson @ Flickr

As someone who is interested in artificial intelligence, especially how AI will work in a financial environment, there’s a lot of information out there.

And that information doesn’t always agree. In fact, there’s a chasm of difference between the camps of AI advocates and critics. There’s also a difference in opinions about the potential for AI to change things–or mess things up, depending on that outlook.

That’ what makes an article in H+ Magazine so interesting. The article, based on Eric Drexler’s Engines of Creation, just looks at the effect a little AI will have on the world when mixed with nanotechnology. We’re not even talking about massive AI here.

The effects on the economy would be startling.

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Pic by the Alieness GiselaGiardino @ Flickr

Artificial Intelligence, or machine learning, or simply AI, drives more and more financial systems. The big boys –from hedge funds to mutual funds, and everyone in between–use AI.

The types of AI that serve as the foundation of these financial application are wide ranging is size and scope. The programming varies, too. Genetic programming, neural networks, and a host of other applications are used as underpinnings for the strategies and algorithms.

Since most independent traders don’t get a chance to invest in hedge funds, Online Investing AI, we want to create trading systems and strategies for independent traders and investors that are based on the performance of the best AI technology.

It’s a pretty audacious task. That’s why we need you.

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