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Top Traders Unplugged

BO57: A.I. Strategies With Human Biases

Top Traders Unplugged

Niels Kaastrup-Larsen

Business, Business News, Investing, News

4.8670 Ratings

🗓️ 15 April 2020

⏱️ 6 minutes

🧾️ Download transcript

Summary

Are A.I. programmers unknowingly passing their human biases into the algorithms?

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Transcript

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0:00.0

It was a follow-up to the one I just read, which is, however, these days we're much trickier.

0:08.0

We program the algos to avoid the same pain, quote, get me out before I lose too much money, unquote.

0:16.0

We can claim to follow the rules, but the result can be the same. And I think that's what we're doing

0:22.6

and are susceptible to these days. When I was a young trader starting out, I sat in front of a

0:28.6

quote machine with a chart book and I filled in the daily open, high, low clothes with my pencil.

0:37.3

And so I would sit there and get freaked out about a big coffee move or want to get

0:42.6

out quicker or avoid a trade.

0:44.9

And definitely not, no one would say that was legitimate.

0:50.0

You're not following the system.

0:51.8

But now I think we have the temptation and the ability to program

0:55.7

in those same bad ideas to take small profits and somewhat over have other features that

1:04.3

prevent more of a traditional approach to just following breakouts or moving averages or price trends and we can say well it's just

1:13.4

part of my rules and yet it kind of does the same thing that we used to have to do just

1:18.3

with when we didn't have fancy computers and people programmed them for us.

1:25.9

I think that's a great, great point and and it's very, very important, actually.

1:30.2

I remember just back in February when we had the big correction in equities,

1:36.0

which was really, really painful for a lot of managers, including us,

1:40.2

even though it came at the back of a great period, but still it felt painful.

1:46.4

And we had a lot of inquiries about people asking, so what are you going to change to avoid this in the future?

1:54.4

And the answer was really, well, probably nothing, because we're not here to try and fit our systems to avoid a three-day losing

2:03.8

streak, however painful it is, if anything we look at over the long term would decrease

2:11.7

in value just to avoid that kind of event, so to speak. And I think that goes, you know, to your point, Jerry, that

...

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