Computers can do a lot of things, but they can’t quite replicate the mental processes of our magical and mysterious human brains. We have memories. We make connections. We get songs from the ‘90s stuck in our heads for days on end. Put another way, computers might be book smart, but sometimes...they’re not all that street smart.
Now that all may be changing, thanks to advances in technology and something called a neural network. A “neural network” is a computer system that acts a lot like a brain. Using algorithms, it collects and analyzes its experiences and uses what it’s learned to adjust its behavior in the future. It’s pretty cool stuff, but it’s also kind of freaky. Like...what if our future Roomba suddenly decides one day that it doesn’t want to suck up Mr. Fluffy’s discarded fur anymore? What do we do then?
Might be a question for another day. For now, though, neural networks are making waves in the trading world. Finance aficionados are drooling over stuff like predictive risk models, algorithmic trading, and “smart” market indicators. What could it all mean? It could mean better insights into investment decisions. Faster fraud detection and better fraud prevention. More accurate assessments of a company or fund’s level of financial risk. It’s becoming a whole new ballgame out there, and neural networks are just getting warmed up.
