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Comment by jedberg | Hacker News Reader

It's amazing how a little bit of light insider trading can trump all the algorithms...

To take your comment a little deeper despite me knowing you are being facetious, I think that's exactly it: the algorithms cannot communicate to facilitate these types of advantages. They cannot, in essence, be human.

In a world ran and dominated by humans, there will always be an inherent advantage to being part of the race that creates the game. If algorithms perfect a system in such a way that there stands no gain to be made by those at the top, people will simply create a new game to play.

until they can. And at that point it gets really weird. I have heard reports (but cannot confirm them obviously) that machine learning techniques are already creating trading strategies that exploit weaknesses in other trading system algorithms. At what point does the algorithm correlate what it can see in email inboxes on a connected cloud service with advantageous stock trades ...

> I have heard reports (but cannot confirm them obviously) that machine learning techniques are already creating trading strategies that exploit weaknesses in other trading system algorithms.

This is true, but does not require machine learning.

This is where the real money is to be made in AI trading. Of course this sets of a very interesting series of countermeasure/measure battles.

Is money being made? Seems to me that all trading does is just redistribute existing money, and no wealth is created.

What a waste to have all these computational resources engaging in a continual 'series of countermeasure/measure battles' instead of calculating something useful.

It may seem pointless, but trading like this is actually incredibly useful. It (mostly) removes emotion from the equation, thus lowering the chances of market shocks and decreasing volatility.

Trading results in price discovery. Accurate prices allow more informed investment decisions and the development of more real wealth. The alternative is something like a centrally planned economy which have generally been unsuccessful.

> I have heard reports (but cannot confirm them obviously) that machine learning techniques are already creating trading strategies that exploit weaknesses in other trading system algorithms.

That was being done in HFT long before ML came about. In fact, it's supposed to be the primary source of profit.

I wasn't being facetious -- I meant exactly what you said. Two humans having coffee and trading secrets "they heard around town" will beat an algo any day of the week.

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