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It’s Official: Computerized Trading Agents Do Beat Humans in Foreign Exchange Markets
ScienceDaily (Aug. 5, 2011) — Robot trading agents, which already dominate the foreign exchange markets, have now been definitively shown to beat human traders at the same game.
Results presented at a conference July 22 showed beyond doubt that computerized trading agents, using the Adaptive Aggressiveness (AA) strategy developed at the University of Southampton in 2008, can beat both human traders and robot traders using any other strategy.
The new results were obtained after a re-run of the well-known IBM experiment (2001) where human traders competed against state-of-the-art computerised trading agents -- and lost.
Ten years on, experiments carried out by Marco De Lucas and Professor Dave Cliff of the University of Bristol have shown that AA is now the leading strategy, able to beat both robot traders and humans.
Dr Krishnan Vytelingum, who designed the AA strategy along with Professor Dave Cliff and Professor Nick Jennings at the University of Southampton in 2008, commented: "Robot traders can analyse far larger datasets than human traders. They crunch the data faster and more efficiently and act on it faster. Robot trading is becoming more and more prominent in financial markets and currently dominates the foreign exchange market with 70 per cent of trade going through robot traders."
Professor Jennings, Head of Agents, Complexity and Interaction research at the University of Southampton, commented: "AA was designed initially to outperform other automated trading strategies so it is very pleasing to see that it also outperforms human traders. We are now working on developing this strategy further."
Originally posted by graphuto
Wow, did you come up with all that by yourself? I have never thought about that, but damn.. That's crazy!
Edit:Just watched that TedTalk, and wow... It really blew my mind! Why isn't this at the top of the topics list? Seems very important...edit on 15-8-2011 by graphuto because: (no reason given)
Does a stable global financial market provide these algorithms with MORE or LESS profit then an unstable market ?
Therefore, would it be to their advantage to de-stabilize the global financial market if it means INCREASED profits will be made ?
A robot does what ever it is programmed to do. It has no compassion, greed or bias and just matches patterns. If the pattern it is to look for is maximum profits then that is what is will do, if the pattern is to most effectively distribute resources then that is what it will do. Basically the Earth has had a new baby and it is up to man to support, train, guide and educate this machine. If we do it right this machine will look after us, if we do wrong it will destroy us. In the end it will be a reflection of man, the good, bad and ugly.
According the YT TED vid.. algorithms 'talk' to each other, if I'm understanding what the speaker is saying.. if this is true.. wouldn't one algorithm speak to the other and determine if the price will be going up ??
Ugh.. that really paints a excellent picture of the monster(s) we've created... question now is..can we stop it or have we given this monster so much life, we can't stop it.. ?