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Clarity comments on Open Thread, Jul. 6 - Jul. 12, 2015 - Less Wrong Discussion
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One quantitative finance fund to rule them all?
Machine learning specialists outperform prediction markets and subject matter experts Yet, the quantitative finance industry eagerly laps up former asx employees who supposedly have privellaged knowledge of exchange architecture (they don’t, it’s all published anyway and that which isn’t is privy to freedom of information requests), particularly high frequency trading firms.
I suspect this practice may have more to do with regulatory capture instead. Conspiracy theory aside and assuming there isn’t a meritious benefit to trading firms for such unethical active management, could one expect the merit driven machine learning algorithmic trading platform Kaggle when it sufficiently scales to compete against high frequency trading firms, value investors, proprietary investment banks and day traders simultaneously (is that all the investor classes?)
High frequency trading is not about having complex machine learning algorithms. It's about computers making decisions in very short amounts of time.
Actually, it's about both. Low latency without a good strategy will not help you.
So, if they are so smart how come they ain't superrich yet?
But they are. That's how they're funding it. And once they're open to investors, they're going to become even richer, then once they start operating the fund, that's when they'll go to the moon.
Or at least, that's what it looks like. But I'm asking here just in case I'm getting carried away with this. Even things which look ideal on paper can go astray. If you model the entire approach as an evolutionary algorithm (crowd sourcing algorithms and killing off the losers) then one would imagine that it's just a matter of time before they dominate the finance industry. This all seems for too optimistic though - so I crave someone showing me I'm wrong!
Really, are they?
You seem to forget that this is precisely how markets work and have been working for centuries.