The Stock Market as a Game: An Agent Based Approach to Trading in Stocks

“If ever there were a field in which machine intelligence seemed destined to replace human brainpower, the stock market would have to be it. Investing is the ultimate numbers game, after all, and when it comes to crunching numbers, silicon beats gray matter every time. Nevertheless, the world has yet to see anything like a Wall Street version of Deep Blue, the artificially intelligent machine that defeated chess grand master Gary Kasparov in 1997. Far from it, in fact: When artificial-intelligence-enhanced investment funds made their debut a decade or so ago, they generated plenty of media fanfare but only uneven results. Today those early adopters of AI, like Fidelity Investments and Batterymarch Financial, refuse to even talk about the technology...Data flows in not just from standard databases but from everywhere: CNN, hallway conversations, trips to the drugstore. ‚Unless you can put an emotional value on certain events and actions, you can't get the job done.‘ Naturally, investors don't process this hodgepodge of inputs according to some set of explicit, easily transcribed rules. Instead, the mind matches the jumble against other jumbles stored in memory and looks for patterns, usually quite unconsciously. ‚Often, great investors can't articulate the nature of their talent. They're like pool players who make incredible trick shots on intuition.‘ Fine for them, but how do you code that?” 1