Machine Learning Like A Psychic: Sounds Scientific for 2020
September 8, 2020
DarkCyber thinks most psychics are frauds. They are observers and manipulators of human behavior. They take people’s weaknesses and turn it into profit for themselves. In other words, they do not know the winning lottery numbers, they cannot predict stock options, and they cannot find missing pets.
Machine learning algorithms built on artificial intelligence, however, might have the “powers” psychics claim to have. EurekaAlert! Has a brand new: “Study: Machine Learning Can Predict Market Behavior.” Machine learning algorithms are smart, because they were programmed to find and interpret patterns. They can also assess how effective mathematical tools are predicting financial markets.
Cornell University researchers used a large dataset to determine if a machine learning algorithm could predict future financial events. It is a large task to undertake, because financial markets have tons of information and high volatility. Maureen O’Hara, the Robert W. Purcell Professor of Management at the SC Johnson College of Business said:
“ ‘Trying to estimate these sorts of things using standard techniques gets very tricky, because the databases are so big. The beauty of machine learning is that it’s a different way to analyze the data,’ O’Hara said. ‘The key thing we show in this paper is that in some cases, these microstructure features that attach to one contract are so powerful, they can predict the movements of other contracts. So we can pick up the patterns of how markets affect other markets, which is very difficult to do using standard tools.’”
Companies exist solely on the basis of understanding how financial markets work and they have developed their own machine learning algorithms for that very purpose. Cornell’s study used a random forest machine learning algorithm to examine these models using a dataset with 87 future contracts. The study used every single trade, tens of millions, for their analysis. They discovered that some of the variables worked, while others did not.
There are millions of datasets available since every trade has been recorded since 1980. Machine learning interprets this data and makes predictions, but it acts more like a black box. In other words, the algorithms predict patterns but it does not reveal the determinations.
Psychics have tried to predict the future for centuries and have failed. Machine learning algorithms are better at it, but they still are not 100% accurate. Predicting the future still remains consigned to fantasy and science fiction.
Whitney Grace, September 8, 2020
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