Answers.Body: <p>This is a highly relevant question as market trends have become more emphasized over the fundamentals of individual companies, and algorithmic trading has proven to be quite effective, particularly in areas such as high-frequency micro-trading. </p>
  
  <p>This <a href="http://fortune.com/2013/05/29/a-day-in-the-quiet-life-of-a-nyse-floor-trader/" rel="nofollow noreferrer">2013 Forbes article</a> estimated nearly 80% of stock trading volume in the U.S. is conducted by <a href="https://en.wikipedia.org/wiki/Automated_trading_system" rel="nofollow noreferrer">automated trading systems</a>.  More recently, Bloomberg published an article on the subject: <a href="https://www.bloomberg.com/news/articles/2017-06-15/it-s-a-quant-s-stock-market-as-computer-programs-keep-on-buying" rel="nofollow noreferrer">The U.S. Stock Market Belongs to Bots</a>.</p>
  
  <p>The massive adoption of algorithmic trading in a fairly short span is a pretty good indicator that these systems are effective.  However,</p>
  
  <ul>
  <li><strong>My feeling with any predictive system is that it works until it doesn't</strong></li>
  </ul>
  
  <p><a href="https://en.wikipedia.org/wiki/Perfect_information" rel="nofollow noreferrer">Imperfect</a> and <a href="https://en.wikipedia.org/wiki/Complete_information" rel="nofollow noreferrer">Incomplete information</a> are persistent in real-world scenarios.  The implication is that there are always unknown factors that can diminish quality of analysis, and even lead to disastrous outcomes.  </p>
  
  <p>No matter how complex an algorithm becomes, reality is more complex, <em>(at least for the foreseeable, pre-singularity future;)</em> </p>
  
  <p>Adding to that, systems in general tend to be imperfect, and when engaged in massively repetitive functions, small errors can grow exponentially and produce catastrophic effects.</p>
  
  <p>"<a href="https://en.wikipedia.org/wiki/Flash_crash" rel="nofollow noreferrer">Flash Crashes</a>" are a recent phenomena, and a result of algorithmic, high-frequency, black-box trading.</p>
  
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Answers.CreationDate: 2017-10-10T03:14:49.640Z
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Answers.UserDisplayName: DukeZhou
Answers.Body: <p>A couple of thoughts:</p>
  
  <ol>
  <li><p>Humans can't reliably predict trends in the stock market, so expecting AI's to do so is probably unreasonable.</p></li>
  <li><p>The above would be more true if it were proven that the movement of stock prices is really a random walk, but my understanding is that the current thinking is that stock movements aren't <strong>completely</strong> random... but just really close to random.</p></li>
  <li><p>If there are some trends there that represent a useful signal, and if somebody has found that, they're <strong>very</strong> unlikely to share that information, as the market would then immediately price that information in and they would lose their edge.</p></li>
  </ol>
  
Answers.ContentLicense: CC BY-SA 3.0
Answers.CreationDate: 2017-10-09T21:49:27.463Z
Answers.LastActivityDate: 2017-10-09T21:49:27.463Z
Answers.UserDisplayName: mindcrime
Answers.Body: <p>There is quite some research done by <a href="https://www.youtube.com/watch?v=UVuziqAb4U8" rel="nofollow noreferrer">Hans-Georg Zimmermann</a>, who has programmed Neural Networks for Siemens since some 20 years in order to predict Stock markets. He wrote some books on it, too, though I don't know if they are any good in English.</p>
  
  <p><a href="https://www.siemens.com/innovation/en/home/pictures-of-the-future/digitalization-and-software/artificial-intelligence-overview.html" rel="nofollow noreferrer">This</a> article gets to the point a bit faster than the video, I hope it helps.</p>
  
  <p>edit: I think <a href="https://www.youtube.com/watch?v=AOYo4xPI_BA" rel="nofollow noreferrer">this</a> interview gives a good short introduction to his work.</p>
  
Answers.ContentLicense: CC BY-SA 3.0
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Answers.LastEditDate: 2017-10-13T09:02:38.120Z
Answers.UserDisplayName: Arne
Body: <p>I've gotten curious about this topic and am wondering what the stack exchange community has to say about it. Also, does anyone know of any professors/researchers who have published papers pertaining to this?</p>
  
Comments.ContentLicense: CC BY-SA 3.0
Comments.CreationDate: 2017-10-10T02:54:45.307Z
Comments.Text: Welcome to AI!  Very good question. It is estimated that 75% of US market activity is conducted by automated systems, and I don't expect that number will decline.
Comments.UserDisplayName: DukeZhou
Tags: <research><multi-agent-systems><real-time>
Title: To what extent can artificially intelligent agents reliably predict trends in financial markets?
UserDisplayName: user10101
ThreadText: # To what extent can artificially intelligent agents reliably predict trends in financial markets?
  
  (Asked by: username_0 on 2017-10-09)
  
  I've gotten curious about this topic and am wondering what the stack exchange community has to say about it. Also, does anyone know of any professors/researchers who have published papers pertaining to this?
  
  **Tags:** research, multi-agent-systems, real-time
  
  > **Comments:**
  > **username_1**: Welcome to AI!  Very good question. It is estimated that 75% of US market activity is conducted by automated systems, and I don't expect that number will decline.  
  
  ---
  
  ## 3 answers
  
  ### Answer by username_1 on 2017-10-10. Score: 3
  
  This is a highly relevant question as market trends have become more emphasized over the fundamentals of individual companies, and algorithmic trading has proven to be quite effective, particularly in areas such as high-frequency micro-trading.
  
  This [2013 Forbes article](http://fortune.com/2013/05/29/a-day-in-the-quiet-life-of-a-nyse-floor-trader/) estimated nearly 80% of stock trading volume in the U.S. is conducted by [automated trading systems](https://en.wikipedia.org/wiki/Automated_trading_system). More recently, Bloomberg published an article on the subject: [The U.S. Stock Market Belongs to Bots](https://www.bloomberg.com/news/articles/2017-06-15/it-s-a-quant-s-stock-market-as-computer-programs-keep-on-buying).
  
  The massive adoption of algorithmic trading in a fairly short span is a pretty good indicator that these systems are effective. However,
  
  * **My feeling with any predictive system is that it works until it doesn't**
  
  [Imperfect](https://en.wikipedia.org/wiki/Perfect_information) and [Incomplete information](https://en.wikipedia.org/wiki/Complete_information) are persistent in real-world scenarios. The implication is that there are always unknown factors that can diminish quality of analysis, and even lead to disastrous outcomes.
  
  No matter how complex an algorithm becomes, reality is more complex, *(at least for the foreseeable, pre-singularity future;)*
  
  Adding to that, systems in general tend to be imperfect, and when engaged in massively repetitive functions, small errors can grow exponentially and produce catastrophic effects.
  
  "[Flash Crashes](https://en.wikipedia.org/wiki/Flash_crash)" are a recent phenomena, and a result of algorithmic, high-frequency, black-box trading.
  
  
  ---
  
  ### Answer by username_2 on 2017-10-09. Score: 2
  
  A couple of thoughts:
  
  1. Humans can't reliably predict trends in the stock market, so expecting AI's to do so is probably unreasonable.
  2. The above would be more true if it were proven that the movement of stock prices is really a random walk, but my understanding is that the current thinking is that stock movements aren't **completely** random... but just really close to random.
  3. If there are some trends there that represent a useful signal, and if somebody has found that, they're **very** unlikely to share that information, as the market would then immediately price that information in and they would lose their edge.
  
  
  ---
  
  ### Answer by username_3 on 2017-10-13. Score: 1
  
  There is quite some research done by [Hans-Georg Zimmermann](https://www.youtube.com/watch?v=UVuziqAb4U8), who has programmed Neural Networks for Siemens since some 20 years in order to predict Stock markets. He wrote some books on it, too, though I don't know if they are any good in English.
  
  [This](https://www.siemens.com/innovation/en/home/pictures-of-the-future/digitalization-and-software/artificial-intelligence-overview.html) article gets to the point a bit faster than the video, I hope it helps.
  
  edit: I think [this](https://www.youtube.com/watch?v=AOYo4xPI_BA) interview gives a good short introduction to his work.
  
  
  ---
  
  