Geege Schuman stashed this in Mathy
Stashed in: Investing
You can't argue with the rat stats! And you can breed for it!
STEP 3 DEVELOPING A PEDIGREE
We are continuously crossing the best trading rats with each other in order to breed specialists in various markets for our clients. The second generation of top traders ususally shows a much better performance compared to their parents.
STEP 1 DEVELOPING TICKER TRACKS
The first step is the transformation of price data into sound, so called ticker tracks. We use tick data from various futures and foreign exchange markets in order to generate sound in accordance to the real time price data. The relevant literature indicates that rats especially respond to piano sounds, so we are using these as a base for the ticker tracks.
Rattraders in the laboratory.
a classic skinner box for behavioral science experiments.
The sound is modulated in correlation to the price movement: if the price goes up, the pitch goes up as well, always depending on how strong the up-movement had been. When prices drop, the following sound's pitch is reduced depending on how strong the price has fallen. Always in regard to how long it took for the next trade to happen (time between trades can vary between 1 second and 1 minute occasionally), I used different kinds of piano modulations. After some tests, we found that our probands reacted best to 25 price ticks or sounds, so one track was to take 10 to 20 seconds accordingly, depending on the market movements.
STEP 2 TRAINING THE RAT TRADERS
From the beginning, the future brokers are exclusively trained in the market segments they will also be working in after their training has been accomplished. The basic training takes about 3 months. The environment is a so called Skinner Box, widely used in experiments and industry for behavioral experiements with animals. The rats are separately trained for 5 hours daily.
Every day, they are confronted with 100 different ticker tracks.The goal is to make them find out sound-patterns that humans are not able to recognize and to predict the next market move after the last sound heard. Each time after listening to a sound, the rats must choose pressing either a green or a red button, green for "long" (if the prices are expected to move up), red for "short" (if they predict a decline in prices). If their prediction prooves to have been correct, they receive a small amount of food, if the wrong button has been pressed, the failing candidates receive a minor electric shock.