Scientists Develop Financial Turing Test

KentuckyFC writes writes to share a new online test that is being touted as the "financial Turing test." The web-based exercise asks users to distinguish between real and randomly generated financial data. "Various economists argue that the efficiency of a market ought to be clearly evident in the returns it produces. They say that the more efficient it is, the more random its returns will be and a perfect market should be completely random. That would appear to give the lie to the widespread belief that humans are unable to tell the difference between financial market returns and, say, a sequence of coin tosses. However, there is good evidence that financial markets are not random (although they do not appear to be predictable either). Now a group of scientists have developed a financial Turing test to find out whether humans can distinguish real financial data from the same data randomly rearranged. Anybody can take the test and the results indicate that humans are actually rather good at this kind of pattern recognition."

Comments

Re:Not random and not predictable?

[colonelquesadilla]

It's a chaotic system, but it has certain patterns that seem to repeat. The thing I noticed after looking at a few, is that the real ones are easily identifiable by the development of resistance and support levels, which technical traders use to find probable entry and exit points. Basically, the hypothesis is that a group X holds the stock, they tend to have some psychological barrier price in common at which they would sell, and another at which they would buy more, this selling and buying makes it difficult to break through those price points. When it approaches one of those points trading goes up, if something has changed to make the stock more attractive to another group, or to make it less attractive to the group of traders that tends to hold it, it will change hands, and the new investor group will have new barriers. So over any given time period you will notice a lot of closing stock prices at close to the same level, then a sudden jump, and new level it bounces between, etc.

Re:Not random and not predictable?

[u38cg]

Yes, you are pretty ignorant, I'm afraid. Don't be ashamed, you're in the larger group. Happily, a dose of economics would sort you out a treat. To sort out your central misunderstanding, neither the amount of wealth or the amount of things that you can buy or the amount of work there is to be done is fixed. They relate to each other in rather complex ways, but the upshot is that we can all become richer - and if you don't believe me, ask your great-great-grandfather, or a Chinese factory worker saving up her wages to pay for an education.