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August 2, 2011 / David Bleeker

Top Trader Bot Beats All Humans

A decade has passed since IBM’s seminal demonstration that software bots could beat humans at securities and commodities trading. Since then the bots have been competing among themselves until now, on the 10-year anniversary of bot’s supremacy, an architecture called AA (adaptive-aggressive) has emerged as king-of-the-hill.

The AA algorithm differs for the other algorithms in that it aggressively trades off profit for the ability to make a transaction, it then adapts its aggressiveness after each completed buy or sell. By mimicking the method used in IBM’s original paper to judge the bots, Cliff and De Luca claim to show that AA outperforms all the other strategies in both bot-to-bot and human-versus-bot trading. [read more]

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