Automatic trading algorithms are important elements of the financial industry. Their very existence raises issues. In addition, there are issues of robustness and the empirical support for the data they use to make decisions.
Shing Tat Chung created an automatic trading algorithm that makes its decisions based on a variety of superstitions:
The Fund looks at producing a dialogue around issues such as irrationalities and its consequences as well as providing an alternative view on how technology or algorithms can perform and operate. Markets are becoming increasingly automated, in 2007, 60% of market trades were completed by automated bots. Whilst the ‘zombie’ bot that caused volatile swings in the markets in 2012 also caused its parent company, Knight Capital, to lose $440 million.
A small pool of real, donated money is at stake. As an art piece this work raises interesting question. Like any experiment with only a single sample, does it have the potential to convey the “wrong” message on trading algorithms and superstitions if it winds up making money by chance?
At the time I wrote this, the fund was at -9.87%. So, my concerns may only be theoretical.
*Hat tip to Mark Frauenfelder at BoingBoing.