Man Group Using AI Trading Strategy It Cannot Fully Explain


Just don’t ask questions. When something is working (especially profitable trades) don’t ask why, just trade bigger. Seems like Man Group (a $96 billion dollar hedge fund) created an artificial intelligence (AI) program that worked so well that alpha just rolled in. Problem; they didn’t know how the ‘robot’ worked and made the trades it did. Scary, but really kind of interesting. Memo to Man Group; when explaining the strategy the word is PROPRIETARY. And say it with authority.
(Bill Taylor/CEO)

“Artificial intelligence has been around since the 1950s but is exploding in popularity recently, especially in the world of finance.

The idea that an investor can do a bit of programming, and then sit back to watch the profits roll in is an exciting idea, especially when it works. But according to a story by Adam Satariano and Nishant Kumar from Bloomberg, one hedge fund manager was initially scared by how well his AI trading machine worked.

“Were we scared by it? Yes. You wanted to wash your hands every time you looked at it,” Luke Ellis, CEO of $96 billion hedge fund Man Group, told Bloomberg.

Ellis told Bloomberg that his firm developed a system that worked well and generated profits, but the firm couldn’t really explain why it worked or made the trades it did, which is why they held off from rolling it out broadly. But, after several years a Ph.D. level mathematician at the firm decided to dust it off and give it a small portfolio to play with. Since then, the firm has been made the AI model a regular part of the family at Man Group.

It’s worth reading the story behind the firm’s trading algorithm from Bloomberg, as it tells the tale of an especially successful implementation of one of the hottest areas of tech right now…”

Full Story at BusinessInsider