The world's most boring TV station. Or a way to set up a computer system that structurally matches the set up of neural system of the human brain.
In an ANN, as they are sometimes called, there are simplified units, known as nodes. These nodes are connected to each other to form a network. The structure resembles the way neurons are arranged inside the brain.
The benefit of the ANN is its flexibility, which allows the system to mimic a simple form of what we might call learning. Given individual examples of something, the system can compare similarities and differences in order to come up with criteria for future comparison.
In terms of finance, artificial neural networks can contribute to the modeling used for quantitative trading. Past market data can be fed into the network, which can then identify possible trading triggers. These flags can be used in algorithms to make future decisions.
Artificial neural networks are used by traders to make predictions. They deploy algorithms to detect patterns and meaningful changes in the markets. That’s a really important thing if you consider that this was once done by a whole bunch of nerdy math gurus sitting around a table, running calculations in long-hand form. Imagine how long that would take in today’s connected global marketplace.
Artificial neural networks are changing the world of trading because they’re linking market data together so granularly that essentially all markets are becoming ‘one’ (not like U2’s song). They can help to predict daily closing prices of stocks, patterns that stocks will take, and even currency valuation changes. Way better than the crystal ball they used to use.
Related or Semi-related Video
Finance: What is a Chartist?26 Views
Finance allah shmoop What is a chartist Well here's a
chart and here's a chart and here's a chart All
right Well these are pages from the investing bible of
a chartist A chartist is an investor really a traitor
as they tend to own stocks for a much shorter
period of time than a longer term Really invest or
type person a chartist relies solely on the patterns The
pattern's right there These are all patterns imputed by the
charts that they you know sitting poor threw for hours
and hours So check out this chart see how the
plotted data closely follows the characteristic line there The characteristic
line basically is plodded through all those dots Yes So
they're going to stare at that try to figure out
where that line is going in the future right Get
the crystal ball or all right Well let's look at
this one where the data forms what looks like Well
the head and shoulders of someone who you know doesn't
have a neck that's Just common pattern in trading And
you know if you stopped looking at it and two
thirds of the way through there it's heading down Well
Maybe you'd be short the stock for a few days
and then you see it bottoming and then you'd be
long and try to make money that way Good luck
All right len look at this chart Where is right
here where the data appears to We'll break away from
the established pattern which was all just kind of boring
Lee along down here And then suddenly everything goes up
Yeah start doing its own thing Well maybe the company
reported a good quarter or ah you know the government
cut taxes again Everything went up So these were the
tools of the chartist The chart's a chartist is the
opposite of a fundamental investor meaning that she doesn't know
or care what the company does for a living Really
she doesn't care about their p e ratio nor their
profit margins nor their debt levels on their balance sheet
nor much of anything fundamental about how their business runs
Chartist just care about the pattern they glean from the
charts and all the charts always work until they don't
And what happens when the meteor hits that is that 00:02:06.0 --> [endTime] predictable on a chart Ah
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