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BULL’S EYE: The allure of the bot in a bottom line


BULL’S EYE: The allure of the bot in a bottom line

A machine-learning robot can squeeze out mini-profits that may not amount to much but are at least positive


Every so often US financial websites roll out the same amazing fact: that in such-and-such a trading period (six months or a year) Goldman Sachs (or JP Morgan) made zero daily losses on the markets. Zero. Their algorithms are able to game the system such that the worst the giant squids would ever do is break even.

You can understand the allure of such trading systems, in which “black boxes” just about guarantee consistency and an ability to smooth out volatility. They don’t necessarily deliver market-beating performance, but they don’t lose money. 

Certain retail investment products, based on quantitative analysis, are sold to the public on the implicit vow that their systems will find a winning edge even when markets turn sour. Without quite saying so, quant-based strategies imply that warm-blooded human input would only mess up the works...

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