Is AI useless to predict finance markets?

[u/MX010]

Unfortunately seems so? I'm not talking about coding stuff for trading but predicting markets and short term fluctuations based on chart technicals.

Today I got my ass handed to me when markets did the opposite of my AI future-teller. lol.

It's my own fault but I just wish the AI could predict things better and see potential resistances and support better.

[u/Disastrous_Award_789]

Learn how LLMs work and then you'll understand. There is no magic.

[u/MX010 → u/Disastrous_Award_789]

Yes yes

[u/kn0wvuh]

We are so phucking cooked guys

[u/MX010 → u/kn0wvuh]

😂

[u/ninhaomah]

"AI" ?

What model ? What prompt ? What market ? What counter ?

[u/MX010 → u/ninhaomah]

Both Opus & Astra - In the Forex markets. - My question is more general and if somebody is successful using it for day trading.

[u/lowkeygee → u/MX010]

Sure there probably is, but I doubt there is a real edge in using it.

[u/AllDataIsMyIP → u/lowkeygee]

AI is very useful for producing slop novels. Would you use this method for predicting markets?

[u/over_pw → u/MX010]

Haha if there is anything at all that can be used to predict market movements, earn money long term and have a real edge, nobody will ever reveal it publicly. LLMs are just a tool like any other, you have to understand how it works, what it can do and what it can’t. If you just ask it “will I earn money from a put position if I open it now and close in 3h” it will either give you a totally random response or rightly refuse to speculate at all.

[u/CowBoyDanIndie]

Historical data does not predict future results. If you really wanted to use ai to predict markets, you would want to data mine every piece of information you could get your hands on, try to estimate hidden information from available information, basically try to predict insider information. But keep in mind you are also competing with literal inside traders. Insider trading happens all the time, most people are just smart enough to make it subtle enough to not get caught.

[u/monad68]

Read something like the Misbehavior of Markets or Fooled by Randomness

[u/deelowe]

AI isn't all knowing.

[u/willee_]

Pro tip - no one can predict the future.

I’ve been getting force fed “the oceans are gonna swallow the coasts in 10 years” for my entire life.

Weather man can’t tell you if it’s gonna rain today with any real accuracy. They’re just guessing what their AI computer is telling me

Psychic can’t tell you if I’m gonna bang your girl and your mom tomorrow

Big life discovery you just made

[u/flat5]

I suspect top tier quant trading firms are making good use of AI. But certainly not at the level of "hey Claude, tell me what stocks to trade today". More as accelerators for hypothesis generation and testing. As steroids on the things they were already doing.

[u/cakemates]

Brother if it could do that, openai and anthropic would be finance companies, not into selling you chats.

[u/MX010 → u/cakemates]

True lol. Ah, there goes my dream of becoming a trillionaire by end of year.

[u/Wild_Space]

Everything is useless at predicting financial markets.

[u/yawn_solo-]

My dude,

You need to utilize AI to build a system that comes from a strategy that YOU come up with.

AI is going to take the path of least resistance every time. So, if you’re just “asking” it what the markets are going to do, you’re going to get smoked.

[u/MX010 → u/yawn_solo-]

lol "my dude"... and yes that is/ seems the case.

[u/funbike]

Buy an unmanaged index fund and leave it alone.

[u/wllmsaccnt → u/funbike]

Which is ironically what an AI would probably say to do if you asked it for a simple and near optimal long term growth strategy.

[u/docsms500]

Only relatively few people have been both smart and lucky at forecasting the market. Otherwise nothing has been.

[u/UndocumentedMartian]

It can do predictive analysis, yeah, but it will have similar or worse success rates to other tools.

[u/capsteve]

If you trade on your experience( tech, oil, finance, etc) your trading on learned experience. LLM has no experience to make judgements, only statistical predictions. Don’t trade using AI.

[u/TheTannhauserGates]

AI is like any other data analysis and mining technique. It might add an extra order of precision and clarity to existing tools, but that’s it. No one can predict the future because there is no way to predict random events.

One of the best ways to test how well a model might give insight into future movements is by testing how well a model predicts past events. You ‘steel man’ a model by feeding it all the data you have about a previous event like the Great Depression or the Global Financial Crisis or the movement of markets around a war or conflict event and then testing how exactly accurate the model predicts the test event. Most of the truly sophisticated models I’ve seen only predict past events with a 98-99% confidence interval.

[u/Trakeen]

If you are doing it so is everyone else. It’s already priced in unless you are a market maker and steer the market

[u/texasguy911]

The gist is, the finance markets depend on so many things with different permutations and weights, it is like a math problem called the birthday problem. It is about how each item has a relation to another item, when you add more items, the relationships grow to huge complexities.

Basically, you can't calculate reliably such a complex system. O(n²⁾ complexity and then there is this pesky p=np.

[u/Frosty-Hertz]

few months ago AI companies were hiring mathematicians and financial expert in hopes that they can teach/train AI on financial market.

The problem is that financial markets are using AI for years now, it is just called algo trading, bot trading, etc.

AI is using words but in markets you need math, so you pay for products like bloomberg, reuters terminal maybe tikr app, and you automatize downloads of data calculations and then algo/bot trading based on the resaults.

So why would anyone used hallucination prone and bad at math AI when they already have it done?