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2010-06-15
Featured Article

Stock Market AI

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Tagged As: AI, Finance, and Machine Learning

Investors are always coming up with new ways to beat the street when it comes to picking when to buy and sell stocks. There's naturally an element of actual research to the viability of a company or resource, but the modern market has devolved largely into a system of scrutinizing psychology to determine how "the other guy" is going to behave. A new system called AZFinTest may be able to do just that.1 In a nutshell, the system ingests up to the minute ticker prices and performs correlations of movement against a parallel ingestion of news articles. The algorithm parses the news for key buzzwords that are often associated with particular purchase or sale behaviors that they trigger in human readers. Using this learning algorithm and applying it to the present state, the system has demonstrated itself to consistently generate activity that would beat most leading financial advisors. This makes me inclined to further believe the modern street is less and less about the investment and more about simply gaming the other traders and institutions.


1 Robert P. Schumaker and Hsinchun Chen. Evaluating a News-Aware Quantitative Trader: The Effect of Momentum and Contrarian Stock Selection Strategies, accessed June 2010 from Arizona at http://ai.arizona.edu/intranet/papers/News-Aware%20Quantitative%20Trader.pdf (pdf)


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