Training Rats as Traders

http://sites.google.com/site/artmarcovici/rat-traders

by nav • 17 years ago

111 43 17 years ago

sites.google.com

jibiki3• 17 years ago

Fascinating. I'm extremely skeptical, of course. The thing that bothers me most is that they list percentages (perhaps this is the percentage of time that the rats guess correctly?) rather than $ amounts.

Even if the experiment fails, explaining the fact that the later generations performed better could lead to some really interesting science.

streety• 17 years ago

Did the later generations perform better?

As far as I could see it was only Mr. Kleinworth Morgan Jr 5 which performed noticeably better. Run through a statistical test I doubt the results observed would deviate from random variation.

jibiki3• 17 years ago

I got that the 2nd generation average is 48.7% and the 3rd generation average is 50.4%. I'm too lazy to find the standard deviations.

Eliezer• 17 years ago

Percentages rather than dollars are worthless. There are skewed bets; you can predict "up" rightly 70% of the time and lose money on the bigger downward 30% of the movements.

joeyo3• 17 years ago

Be that as it may, if the rats cannot do better than a coin toss, what use is it?

mkelly• 17 years ago

I wonder how this compares to using a neural network. I see no comparison to using other methods to predict the market, though he claims to outperform humans.

safetywerd• 17 years ago

It is a neural network though, isn't it?

Rod• 17 years ago

Exactly. It just isn't an Artificial Neural Network ;-) After all, though rats are super disgusting, they were created by Nature.

nav2• 17 years ago

The study is very eye opening to say the least. Results are based off of and emotion-free instinctive approach to choosing outcomes based on (to a degree) fundamental investment principles. Pavlov's application to investing. I agree with the thread, the most fascinating aspect is the generational improvement throughout the experiment.

Spyckie• 17 years ago

My first thought was, is it April 1st already?

"Since I did not want to make it too complicated, I only used the USD/EUR future to make the rats experts in this specific market segment, but other rats can be trained in other markets as well. I trained the rats for about 3 months, starting with 80 Sprague Dawley laboratory rats, 40 males and 40 females with the intention to cross the best of them to genetically create the best traders through select breeding."

Sounds like a pigeonrank algorithm to me...

Raphael2• 17 years ago

Same! We need an organized campaign to finally get subdomains in the URL preview.

cvg• 17 years ago

hovering over the link to see the status bar url is probably easier

andreyf• 17 years ago

Considering the rest of the website, this is probably social commentary, not a real experiment...

simonb• 17 years ago

But on the other hand the author seems to be accomplished in the financial field. From his site:

"He quit school at 17 and started his first own business in the financial field, publishing analysis on the financial markets and managing funds, until he sold his business at the age of 23. [...] He was also active in the field of software development, is the originator of many inventions, and holds international patents ranging from climbing equipment and bicycle gears to trading systems and electronic payment systems."

Alex3917• 17 years ago

It's clearly not a real experiment. The social commentary angle is interesting, although personally I'd tend to lean more toward elaborate hoax. The only thing I don't understand is why it has so many votes. It's not like it's at all insightful or illuminating when viewed as a thought experiment, so people must just be falling for it.

cosmo7• 17 years ago

Excellent social commentary.

The rather neat dynastic results table at the end show percentages but no legend; does anyone know what they represent?

likpok• 17 years ago

Issues with this that I see (aside from the obvious lack of statistical rigor) are that he gives the rats repeated input. Effectively, he is selecting for the rats who best memorize tracks 1-600.

steveplace5• 17 years ago

And if you assume that there exists a fractal nature in financial markets, it's not necessarily a problem (sample size is low, but premise applies).

mechanical_fish• 17 years ago

aside from the obvious lack of statistical rigor

I think we've found a very fun story problem for a Statistics 101 class.

paraschopra2• 17 years ago

Isn't it forex, not stocks?

steveplace5• 17 years ago

He traded forex and futures, not actual stocks. Headline misleading.

omarchowdhury• 17 years ago

How is the headline misleading? It says 'traders' not 'stock traders' specifically.

biohacker422• 17 years ago

Awesome!

Spoiler alert, predicting a self aware system like the stock market not so much possible in the long run.

But profiting from the lucky guesses of rodents in the short term - possible and awesome. (As long as it's not your money on the line.)

rw• 17 years ago

> "predicting a self aware system like the stock market"

Please elaborate on why you think the stock market is self-aware!

sachinag• 17 years ago

He saw the movie Pi.

biohacker422• 17 years ago

The market makers, those tend to be human beings who buy and sell stocks, watch the market and continuously adjust their actions based on their observations of the market.

No elaborate theory here, just stating the oversimplified obvious.

steveplace5• 17 years ago

Essentially, he made a more complicated version of a moving average quant system.

The more interesting part was breeding top-performing rats to see if they are able to improve their "trading" genetically. You can do this exact same thing using evolutionary algorithms with trading systems that help you to adapt to the market.

Quant finance is fun when you're doing it for yourself, not a bank.

cool-RR2• 17 years ago

I'm not sure that what you say is right. What makes you think that it's the same?

steveplace5• 17 years ago

He assigned pitches to how fast the market was moving, and trained the rats on those pitches. The speed of the market can be measured using averages.

alecco• 17 years ago

We don't want HN to get hammered, please don't submit this kind of "fluffy" stuff.

Save HN! :)

tichnak• 17 years ago

I would say the % means that out of 100 investment decisions, the rats have been correct at x-percent. I have seen this before and it looks like work in progress, but maybe more art then science, the man is an artist...

nav2• 17 years ago

Well Keith Chen @ yale showed that capuchin monkeys show the same fundamental behavior as humans. By the end, they were trading jello beans for sex and creating their own bubble economy. http://tinyurl.com/au5hq

Comment from a buddy of mine Kartik, that I figured I'd share with the thread.

jibiki3• 17 years ago

Cool article, maybe you should submit it. There was a similar article some months ago, but it seems to have gone unnoticed:

http://news.ycombinator.com/item?id=248613

The NYT article you cited is way better, although I don't think there's much that one can say about either of them.

Allocator2008• 17 years ago

A neural network, whether software-based, hardware-based, or wet-ware based (rat in this case, or human for that matter), can only spot patterns in a given set of data which are there. No patterns in the data means no predictability. You can have the coolest, most hyper-intelligent system ever devised, but that cannot see patterns which do not exist. Of course market data has patterns (sell on Friday, for instance), but it is always limited. Generally, I think you could even in principle never get more than 80% accuracy with any kind of neural network, because of the lack of complete patterns in market data, whether we are talking about a rat or a human or a whatever kind of neural network. Which brings me to a second point, since 100% accuracy or anywhere near that is not possible even in principle, applying electric shocks to test subjects when they are wrong is simply cruel and irresponsible.

Training Rats as Traders

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