We have all seen our fair share of Hollywood ” Artificial Intelligence” feature films like Ex Machina, Blade Runner, I-Robot, and countless others depicting robots learning, thinking and feeling like human beings. We have all imagined what a world would be like having a robot or computer intelligence system capable of mimicking cognitive functions associated with the human mind such as learning and problem solving. In many ways we are witnessing A.I happening right now in our world with things like Google brain, Siri, and even self driving cars. Now, Trade Ideas, a stock scanning service, has created an A.I stock trader called Holly.
So….Who And What Is This Holly
Trade Ideas claim early adopters of AI call the technology a Holy Grail. So, they named her Holly. According to trade Ideas Holly compresses several dozen investment algorithms subjected to over a million trading scenarios overnight to arrive at a subset with the highest probability for alpha in the next market session. The result is a curated, distilled stream of vigorously tested long and short opportunities. In Layman’s terms, Holly takes care of trade idea generation, risk appetite, entries, exits and profit targets removing the human element and the research time of the trader, but it gets better. Holly actually has the ability to “learn” and “change” according to current market environment. This means Holly, like a real trader, can adjust all of the above trading scenarios but can do so faster than you and I could ever imagine.
How Holly Rolls
Lets talk about how this works. Holly currently has 42 different trading strategies and each morning Holly produces 2 to 5 out of those 42 strategies that have the highest probability of producing high alpha trades for that day. Trade Ideas claims that Holly scours through thousands of market charts, data and back-tested results to derive at what strategies should work best for you. When the market opens Holly begins producing trade ideas by offering the type of strategy used, the entry price and the stop loss on the trade but it doesn’t stop there. Because Holly is AI she is always learning and adapting, just like you and I would. Holly consistently adapts to the market in real time by using a risk on/off feature determining the level of risk you should take based on whats happening in the now. So risk on means the strategies are coinciding with the market and the market is in balance so your risk tolerance at that time should be higher or you should be more aggressive in your approach. Risk off would be something like the market is in a whipsaw or chop mode and things are unbalanced. In that case you may want to taper down on your risk appetite or have a more conservative approach to your trades. Remember, all of this is happening in realtime and Holly will, like a human, change entries, exits, ideas, risk, stops, etc in a moments notice. Then each evening Holly will go through all her trades and analyse them, yep just like you and I Holly keeps a journal and studies. She will then correct herself and modify her strategies and implement the changes immediately, she never stops learning or developing. Holly’s ability to make lightning quick decisions and then modify those decisions on a dime and even learn from her mistakes is human like and beyond impressive. See Holly In Action Here
Damn She Is Good
The thought of a personal robot trader was too much for me to take so recently Trade Ideas had a 7.99 1 week trial special to TI premium which features Holly AI.( I currently have just the standard subscription which I have had for many years but does not include Holly.) Below is a screenshot of Hollys results through the week of 7.18.2016 to 7.22.2016. The date is listed on the top of each screenshot.
Most of the categories are self explanatory such as long/short or time. The strategy is the type of strategy that was used, exit reason is the stop loss. As mentioned above Holly can change her mind so a “profit save” was a decision she made to conserve profits and a “time stop” is a decision she made by being in a trade long enough and it wasnt working like she wanted so she cut it. Again, just like a human.
As you can see these results are pretty good. During my trial week Holly was accurate over 75% of the time and even on the trades she lost on, as you can see, were very minimal. Perhaps what may paint a better picture is the chart below that shows Holly’s performance against the SPY and how much she is outpacing it this year and being far more consistent than a market that is currently at all time highs.
Holly is unstoppable. Unlike you and I she does not get tired or lose focus. She does not get sick, take days off, take a lunch break, go run errands or complain. Holly doesn’t have a bias, she doesn’t get involved in social media trolling or show emotions. She is full throttle all day, every day. She is the true definition of “Beast Mode”. Holly’s ability to change her thinking right in front of you is truly unbelievable. There is no way any human being alive on this earth could search through this many stocks, come up with this many trading ideas, and then manage them with +70% or better accuracy. Holly covers every detail of trading in millisecond and can react faster and more intelligently than you and I could ever dream of.
Holly is not auto trade enabled meaning you cant link these trades directly to your account and have her trade for you while you walk around the mall, you actually have to manually enter the trades yourself. Trade Ideas claims it may be something available in the future. My best guess is there is big legal issues here for auto trading this thing right now. If you ever seen the movie I- Robot eventually the robots formed an alliance between themselves and then turned on the people who made them. I dont think adorable sweet Holly would do such a thing but I wouldn’t rule out a computer glitch making her go haywire and blowing up your account one afternoon while you were out walking your dog and drinking a smoothie, so you have to watch her and enter the trades yourself.
This creates possibly a few other problems. First is you trusting Holly. You will probably find it difficult at first to take orders from a computer. The good part is after 3 days of trading is you will definitely believe her. The second is more human element. When Holly tells you to leave a trade you have to manage that part and that could be good or bad. If you have trading experience and you are successful you will find this good as I did. Some of Holly’s winning trades are only 20c to 50c in profit. Many of these trades went for much larger amounts when I held on longer than she did. If you can combine your trade exits with Hollys entries you will be a force of nature in the trading game. If you are new to trading I advise you to just listen to her she knows whats up.
Another problem is there are days when Holly trades too much, like 20-30 trades. I hope this is something in time that she will correct and lower the amount to 10 or so. Also, many traders, especially new traders, may depend on her too much. At this time you still have to work with her which I think is fine but some traders may be expecting too much.
We may be bearing witness to the future of stock market investing. Holly removes the very element of what causes traders and investors to fail and that is the Human element. Holly doesn’t experience fear or greed nor does she second guess herself. Holly will out-think you right in front of your face so much so I think you will have a hard time believing it. I have been an active trader now for over 16 years and I had never thought I would see anything in my lifetime like this and the though that she, as well as this technology, will get better really excites me. As I said before it would be impossible for any human alive to mach up against the power of Holly. Lets put it this way Stephen Hawking aint got nothing on Holly. Is Holly perfect? No. Will she do everything for you? No. However, there is no doubt she is light years ahead of her time and we may crossing into a whole new realm of how we do business. Your goal in trading is Alpha. You get in this business to make money plain and simple and Holly adds not just one more tool to your arsenal, but perhaps the single greatest tool available, progress. She does not stop evolving but does so at a rate we are not capable of. Holly’s abilities are limitless. I would find it very hard for someone not to make money with Holly. She is that good.
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