{"id":7625,"date":"2017-08-16T06:57:54","date_gmt":"2017-08-16T14:57:54","guid":{"rendered":"http:\/\/www.rifters.com\/crawl\/?p=7625"},"modified":"2017-08-16T09:51:59","modified_gmt":"2017-08-16T17:51:59","slug":"the-return-of-the-slow-wave-trader","status":"publish","type":"post","link":"https:\/\/www.rifters.com\/crawl\/?p=7625","title":{"rendered":"The Return of the Slow-Wave Trader"},"content":{"rendered":"
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Excerpts from dinnertime conversation with a retired investment banker:<\/em><\/p>\n

Angela Merkel emerges from a meeting with Donald Trump. “Yes,” she says in answer to a reporter’s question, “we had a provocative but productive<\/em> discussion.”<\/p>\n

She rolls her eyes.<\/p>\n

\"We<\/a>

We probably shouldn’t have forgotten about this as soon as we did. Blame hyperbolic discounting.<\/p><\/div>\n

The market soars on hearing the good news. It soars because once again, after a brief hiatus in the wake of that scary Flash Crash of 2010, eighty percent of market trading is once again done by bots,\u00a0 and bots don’t get sarcasm yet.\u00a0 They only read the words they see online, take them at face value; they don’t understand that Merkel meant exactly the opposite of what she said.<\/p>\n

We, however, do. Finally, thanks to Trump, traders who inhabit meat have a fighting chance against those who inhabit silicon. Until bots learn about sarcasm and deception, at least.<\/p>\n

That window may be closing even as we speak. The machines are already picking up some of those nuances. Not the HFT bots with split-second memories; those are dumb fast algos, always will be.\u00a0 But the deeper AIs, the nets with layered interneurons; they<\/em> seem to be catching on. Trump’s tweets are already showing less of an impact on the markets than they did after his Merkel Meeting.<\/p>\n

I asked my friend: are those tweets losing influence because the people writing the code said “Wow, Trump’s a fucking loon\u2014 we’d better go in and tweak those parameters”\u2014 or because the code itself is learning on its own?\u00a0 I mean, if I was a trading net, I’d use some Bayesian thing to constantly update the weight I attributed to any given source: the more often it paid off when compared to independent data, the more seriously I’d take it next time, and vice versa. Maybe the AIs are doing that?<\/p>\n

My friend didn’t know.<\/p>\n

I’m hoping one of you might.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Excerpts from dinnertime conversation with a retired investment banker: Angela Merkel emerges from a meeting with Donald Trump. “Yes,” she says in answer to a reporter’s question, “we had a provocative but productive discussion.” She rolls her eyes. The market soars on hearing the good news. It soars because once again, after a brief hiatus […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23,34],"tags":[],"class_list":["post-7625","post","type-post","status-publish","format-standard","hentry","category-airobotics","category-economics"],"_links":{"self":[{"href":"https:\/\/www.rifters.com\/crawl\/index.php?rest_route=\/wp\/v2\/posts\/7625","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.rifters.com\/crawl\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.rifters.com\/crawl\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.rifters.com\/crawl\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.rifters.com\/crawl\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7625"}],"version-history":[{"count":4,"href":"https:\/\/www.rifters.com\/crawl\/index.php?rest_route=\/wp\/v2\/posts\/7625\/revisions"}],"predecessor-version":[{"id":7630,"href":"https:\/\/www.rifters.com\/crawl\/index.php?rest_route=\/wp\/v2\/posts\/7625\/revisions\/7630"}],"wp:attachment":[{"href":"https:\/\/www.rifters.com\/crawl\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.rifters.com\/crawl\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.rifters.com\/crawl\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}