Answers.Body: <p>AFAIK, unfortunately no.</p>
  <p>However, we can get a feel of these beasts from some clues:</p>
  <ol>
  <li><p>They do machine learning. E.g. see <a href="https://www.kaggle.com/c/two-sigma-financial-modeling" rel="nofollow noreferrer">this competition of Two Sigma on Kaggle</a>, and <a href="https://www.kaggle.com/c/optiver-realized-volatility-prediction" rel="nofollow noreferrer">this competition by Optiver</a>. The point is they are willing to do much work just to predict 1 metric e.g. volatility.</p>
  </li>
  <li><p>They hear many signals. E.g. see <a href="https://www.kaggle.com/c/two-sigma-financial-news" rel="nofollow noreferrer">Two Sigma's competition to predict with market news</a>; there are a lot of potential signal sources such as Twitter. You can easily find lots of such attempts on the internet.</p>
  </li>
  <li><p>They know and act fast. E.g. in 2010, Morgan Stanley built a <a href="https://academic.oup.com/qje/article/130/4/1547/1916146" rel="nofollow noreferrer">high-speed fiber optic cable</a> connecting New York and Chicago, reducing the round-trip speed from 16 to 13 milliseconds. The project cost $300 million, which was <a href="https://www.ft.com/content/45dc452e-bb3d-11e3-b2b7-00144feabdc0" rel="nofollow noreferrer">considered well-worth</a>.</p>
  </li>
  </ol>
  <p>On the other hand, I know a person with 20+ years experience in fintech sector. He said:</p>
  <ol start="4">
  <li><p>They make their own hardware to be fast: once they design a new algorithm/system, they would craft specialized hardware/chips to speed up computation. Commodity hardware are not fast enough.</p>
  </li>
  <li><p>Interestingly, he said they don't use neural network, not because of accuracy, but because it is not fast.</p>
  </li>
  <li><p>They watch their competitors' bids closely (obviously) and adjust theirs, just like playing poker.</p>
  </li>
  </ol>
  <p>All in all, we know that short-term trading is a zero-sum game - our gain is someone else's loss. With this in mind, even if we build a same system which predicts the same as these giants, we will still lose - by the time we get our prediction, these beasts have not only got the prediction, but also read your actions, placed the bid, took the money and quit as the price changed.</p>
  <p>Sometimes we may get lucky and win, just like in a casino. However, the house always has the last laugh.</p>
  
Answers.ContentLicense: CC BY-SA 4.0
Answers.CreationDate: 2023-03-17T07:06:49.037Z
Answers.LastActivityDate: 2023-03-17T08:54:02.327Z
Answers.LastEditDate: 2023-03-17T08:54:02.327Z
Answers.UserDisplayName: lpounng
Body: <p>This question is inspired by <a href="https://ai.stackexchange.com/questions/39547/is-there-any-ai-model-that-predicts-short-term-stock-price-well">Is there any AI model that predicts short-term stock price well?</a>.</p>
  <p>As answered, game theoretically either nobody would reveal such a model or it would have been alread exploited. Still, it could be instructive to look at successfull past models, developed in the past and looking at data of that time. This model are expected not to perform well today, but they were profitable back then.</p>
  <p>To be clear, developing a model at a given time and claiming success on historic data is not what I'm looking for here.</p>
  <p>So, are there public examples of AI models that predicted short-term price well?</p>
  
Comments.ContentLicense: CC BY-SA 4.0
Comments.CreationDate: 2023-03-15T10:51:31.403Z
Comments.Text: You can easily find dozens of tutorial examples with a quick google search of models that do exactly this.  I understand you are not interested in "historical data" and success using it, but are you willing to risk real money to find out if a model works well to effectively bet on a stock?
Comments.UserDisplayName: David Hoelzer
Comments.ContentLicense: CC BY-SA 4.0
Comments.CreationDate: 2023-03-15T11:22:18.463Z
Comments.Text: Are you sure that those model were market beating? I would be looking for more proof than "trust me, I made millions with this back then". Feel free to link the ones that satisfy this criteria. To your second question, no, I would not use those models at all, it is just to get insight into what worked back then and why it was market beating.
Comments.UserDisplayName: Rexcirus
Comments.ContentLicense: CC BY-SA 4.0
Comments.CreationDate: 2023-03-15T11:23:34.107Z
Comments.Text: I would expect these models to be released by hedge funds or similar long after they were not profitable anymore. Or leaked somehow.
Comments.UserDisplayName: Rexcirus
Comments.ContentLicense: CC BY-SA 4.0
Comments.CreationDate: 2023-03-15T13:47:19.233Z
Comments.Text: The short answer is, "No one has managed to create a model that predicts the future."
Comments.UserDisplayName: David Hoelzer
Comments.ContentLicense: CC BY-SA 4.0
Comments.CreationDate: 2023-03-15T14:15:27.593Z
Comments.Text: You don't need to predict the future, you need to extract correlations between datapoints before other parties figure them out too. Otherwise what would predicting in AI even mean?
Comments.UserDisplayName: Rexcirus
Comments.ContentLicense: CC BY-SA 4.0
Comments.CreationDate: 2023-03-15T21:03:30.027Z
Comments.Text: @Rexcirus If it was this simple to beat the market, high-frequency trading companies would do it. In fact, they do do it. Which means they already take all the possible money using this method and you won't get any because yours is slower.
Comments.UserDisplayName: Criticize SE actions means ban
Comments.ContentLicense: CC BY-SA 4.0
Comments.CreationDate: 2023-03-15T21:04:01.170Z
Comments.Text: You can see when most people try to make an AI like this it usually ends up just predicting the next price to be the same as the current price
Comments.UserDisplayName: Criticize SE actions means ban
Tags: <reference-request><time-series><forecasting>
Title: Are there public examples of AI models that predicted short-term price well?
UserDisplayName: Rexcirus
ThreadText: # Are there public examples of AI models that predicted short-term price well?
  
  (Asked by: username_0 on 2023-03-15)
  
  This question is inspired by [Is there any AI model that predicts short-term stock price well?](https://ai.stackexchange.com/questions/39547/is-there-any-ai-model-that-predicts-short-term-stock-price-well).
  
  As answered, game theoretically either nobody would reveal such a model or it would have been alread exploited. Still, it could be instructive to look at successfull past models, developed in the past and looking at data of that time. This model are expected not to perform well today, but they were profitable back then.
  
  To be clear, developing a model at a given time and claiming success on historic data is not what I'm looking for here.
  
  So, are there public examples of AI models that predicted short-term price well?
  
  **Tags:** reference-request, time-series, forecasting
  > **Comments:**
  > **username_1**: You can easily find dozens of tutorial examples with a quick google search of models that do exactly this.  I understand you are not interested in "historical data" and success using it, but are you willing to risk real money to find out if a model works well to effectively bet on a stock?  
  > **username_0**: Are you sure that those model were market beating? I would be looking for more proof than "trust me, I made millions with this back then". Feel free to link the ones that satisfy this criteria. To your second question, no, I would not use those models at all, it is just to get insight into what worked back then and why it was market beating.  
  > **username_0**: I would expect these models to be released by hedge funds or similar long after they were not profitable anymore. Or leaked somehow.  
  > **username_1**: The short answer is, "No one has managed to create a model that predicts the future."  
  > **username_0**: You don't need to predict the future, you need to extract correlations between datapoints before other parties figure them out too. Otherwise what would predicting in AI even mean?  
  > **username_2**: @Rexcirus If it was this simple to beat the market, high-frequency trading companies would do it. In fact, they do do it. Which means they already take all the possible money using this method and you won't get any because yours is slower.  
  > **username_2**: You can see when most people try to make an AI like this it usually ends up just predicting the next price to be the same as the current price  
  
  ---
  
  ## 1 answers
  
  ### Answer by username_3 on 2023-03-17. Score: 2
  
  AFAIK, unfortunately no.
  
  However, we can get a feel of these beasts from some clues:
  
  1. They do machine learning. E.g. see [this competition of Two Sigma on Kaggle](https://www.kaggle.com/c/two-sigma-financial-modeling), and [this competition by Optiver](https://www.kaggle.com/c/optiver-realized-volatility-prediction). The point is they are willing to do much work just to predict 1 metric e.g. volatility.
  2. They hear many signals. E.g. see [Two Sigma's competition to predict with market news](https://www.kaggle.com/c/two-sigma-financial-news); there are a lot of potential signal sources such as Twitter. You can easily find lots of such attempts on the internet.
  3. They know and act fast. E.g. in 2010, Morgan Stanley built a [high-speed fiber optic cable](https://academic.oup.com/qje/article/130/4/1547/1916146) connecting New York and Chicago, reducing the round-trip speed from 16 to 13 milliseconds. The project cost $300 million, which was [considered well-worth](https://www.ft.com/content/45dc452e-bb3d-11e3-b2b7-00144feabdc0).
  
  On the other hand, I know a person with 20+ years experience in fintech sector. He said:
  
  4. They make their own hardware to be fast: once they design a new algorithm/system, they would craft specialized hardware/chips to speed up computation. Commodity hardware are not fast enough.
  5. Interestingly, he said they don't use neural network, not because of accuracy, but because it is not fast.
  6. They watch their competitors' bids closely (obviously) and adjust theirs, just like playing poker.
  
  All in all, we know that short-term trading is a zero-sum game - our gain is someone else's loss. With this in mind, even if we build a same system which predicts the same as these giants, we will still lose - by the time we get our prediction, these beasts have not only got the prediction, but also read your actions, placed the bid, took the money and quit as the price changed.
  
  Sometimes we may get lucky and win, just like in a casino. However, the house always has the last laugh.
  
  
  ---
  
  