Newsflash! AI Still Sucks at Trading

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“82% Of AI Trading Models Lost Money”

Bryan Bottarelli, Co-Founder, Monument Traders Alliance 

Bryan Bottarelli

Dear Reader,

We’ve heard the drumbeat growing louder and louder by the day…

Every boss, every CEO, every talking head on CNBC is shouting the same thing:

“AI is coming for your job!”

Maybe that’s true for some…

But when it comes to trading, the most recent data proves (once again) that AI-based trading algorithms are nothing more than blueprints for a blown account.

Case in point, a recent Bloomberg article posted by Justina Lee titled “AI Bots Auditioning for Wall Street Trading Are Mostly Losing” concluded the following…

AI isn’t ready to replace your fund manager — and the public experiments testing it are showing why.

Across a series of new trading contests between the world’s leading AI models, the verdict so far is unflattering. Most of the systems lose money. 

They trade too much.

They make wildly different decisions when given identical instructions.

And no one yet knows if these shortcomings will fade with more powerful iterations — or if they reveal something fundamental about the gap between large language models and how markets actually work.

The basis for the most recent findings put eight major frontier AI systems — including Anthropic’s Claude, Google’s Gemini, OpenAI’s ChatGPT and Elon Musk’s Grok — up against each other in four separate competitions.

Each was staked with $10,000, and then they were turned loose on US tech stocks for two weeks. The challenge involved trading on a variety of signals, acting defensively, reacting to the competition, and using leverage.

The results were not pretty. 

As a whole, the portfolios lost about a third of their capital across all 32 sets. Only six models finished with any sort of profit.

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82% of the AI trading models lost money.

To me, this is the most public demonstration of what happens when AI systems try to take on some of the most lucrative and skillful work on Wall Street, and why the motto called “human in the loop” remains vital to success when it comes to trading real money.

Now, I admit…

AI is great at doing research, but it’s still ineffective at identifying key variables that move stocks… analyst ratings, chart patterns, insider transactions, sentiment shifts, etc.

And AI still mistimes trades, incorrectly positions sizes, and trades too frequently.

Sometimes, the various AI systems can’t even agree on a market direction.

In the most recent study, Claude mostly wanted to go long, Gemini had no problem being short, and Qwen was comfortable taking risks with big leverage.

Not surprisingly, they all mostly lost money.

Alexander Izydorczyk, former head of data science at Coatue Management and now at NX1 Capital, recently wrote that no AI trading bot he tracks has yet shown a lasting edge.Logo

YOUR ACTION PLAN

My takeaway is simple. Leave the wonders of AI to research (and other data-mining tasks). But leave trading to those who have been fully immersed in it for their entire lives… because guys like Karim and I know more about what moves markets than any AI robot will ever understand.

Maybe that’s a bold statement, but the most recent data continues to support this point. It’s also what makes The War Room one of the strongest trading communities in existence.

If you’re ready to jump into the room with us and crush AI trading models, then click below to “Trade Where Millionaires Trade” Want more content like this?

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Published by RJ Hamster

I was born on 6 August 1956 in San Francisco, California to Janet and (the late) Richard Hovis. I grew up in Santa Monica, California where I attended elementary, junior high school, and high school (graduating in 1974), in addition to involvement in sports and recreation (Little League +, the Boy’s Club ++). Further, it was in elementary school – St. Augustine’s By-the -Sea Parish School that I found, and made the choice to truly journey with God. I attended Arizona State University from 1974 to 1977 – seeking to become an architect, however, I was not accepted, and, as such, I graduated with a Liberal Arts degree. Upon graduation from Arizona State University, I attended Cal Poly San Luis Obispo and studied City and Regional Planning at the Master’s level. I successfully completed one (1) year in a two (2) year program – I did not complete the Master’s degree in City and Regional Planning – due to personal reasons. I returned to Santa Monica where I started (October 1979) my career as graphic designer with Exxon Company, USA. I spent five years with Exxon Company, USA. While working with Exxon Company, USA I was accepted into architectural school – Sci-Arc in Southern California, however, I did not attend preferring to stay with Exxon.. In 1982 I married Laura Flosi and in April 1983 we had our one and only child – Lauren Alain Hovis – a gift from God. We moved to Phoenix, Arizona in 1984 from Los Angeles, where I went to work as a graphic designer with Kitchell CEM (from 1985 -1987). From 1987 – 1995 I was an independent contractor, and a registered representative in mortgage finance, financial management, graphic design, and drafting. Further, I attended the University of Phoenix and successfully obtained a Master’s in Business Administration (MBA) in 1982. I was also a member of the Scottsdale Jaycees, where I became very involved in community events and projects. In 1994, I accepted a cartography position with the Defense Mapping Agency in Reston, Virginia. As such, I relocated from Phoenix to Reston. In 1998, I was accepted and worked as a Visual Information Officer with the Central Intelligence Agency. In 2002, I worked as a Support Officer until my retirement (due to a need for shoulder surgery) in September 2018. Away from my Federal Government service, I have been involved in various organizations and activities in Northern Virginia. In November of 2011, I married Rebecca Ouellette in Santa Monica, California. I reside in San Tan Valley, AZ with my two hamster - Jess and Timothy, our fish, our lizard - RJ Lizard., and our cats - Pearl and Grey. As to hobbies, I enjoy playing sports, attending sporting events, mentoring individuals from financial management to hamsters, building models, photography, travel, multimedia design, managing partner for RJ Hamster, and jazz – smooth jazz to a samba or a bossa nova. Love and God Bless, Peter – aka RJ Hamster Jo hi

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