Synopses & Reviews

Genetic Algorithms and Investment Strategies More and more traders now rely on genetic algorithms, neural networks, chaos theory, and other computerized decision-making approaches to help them develop winning investment strategies. They recognize that the battle in today’s financial markets is increasingly being waged at computer speed, not human speed, and that anyone who fails to exploit these new tools may be headed for extinction. Written by the coauthor of the first published paper to link genetic algorithms and the world of finance, Richard Bauer’s Genetic Algorithms and Investment Strategies is, likewise, the first book to demonstrate the value of GAs as tools in the search for effective trading ideas. Recognizing the continued resistance of many traders and analysts to GAs, it shows how these approaches do not herald an age in which people will be supplanted by machines, revealing instead how they serve only to augment human thinking. In clear, nontechnical language, Genetic Algorithms and Investment Strategies describes the biological bases of GAs, neural nets, and chaos theory…their historical development…the current state of the methodology for each…and their uses, advantages, and limitations as decision-making tools in the world of finance, ultimately demonstrating the superiority of GAs over the other two methods, particularly in handling critical optimization problems. It then focuses exclusively on GAs, presenting simple problems to illustrate the basic steps involved in using a GA and describingwith the help of numerous tables and diagramshow the GA mimics nature’s ruthlessly efficient evolutionary process and moves quickly and inexorably toward a near-optimal solution. Complete with a summary of available software programs, an extensive glossary of GA terms, and a bibliography covering GAs, neural nets, chaos theory, and market timing, Genetic Algorithms and Investment Strategies doesn’t offer a results-oriented, get-rich-quick scheme. Rather, it provides traders and investment analysts with a proven, strategic decision-making process they can use and modify in order to prevail in today’s fast-shifting financial marketplace.

When you combine nature’s efficiency and the computer’s speed, the financial possibilities are almost limitless. Today’s traders and investment analysts require faster, sleeker weaponry in today’s ruthless financial marketplace. Battles are now waged at computer speed, with skirmishes lasting not days or weeks, but mere hours. In his series of influential articles, Richard Bauer has shown why these professionals must add new computerized decision-making tools to their arsenal if they are to succeed. In Genetic Algorithms and Investment Strategies, he uniquely focuses on the most powerful weapon of all, revealing how the speed, power, and flexibility of GAs can help them consistently devise winning investment strategies. The only book to demonstrate how GAs can work effectively in the world of finance, it first describes the biological and historical bases of GAs as well as other computerized approaches such as neural networks and chaos theory. It goes on to compare their uses, advantages, and overall superiority of GAs. In subsequently presenting a basic optimization problem, Genetic Algorithms and Investment Strategies outlines the essential steps involved in using a GA and shows how it mimics nature’s evolutionary process by moving quickly toward a near-optimal solution. Introduced to advanced variations of essential GA procedures, readers soon learn how GAs can be used to:

* Solve large, complex problems and smaller sets of problems

* Serve the needs of traders with widely different investment philosophies

* Develop sound market timing trading rules in the stock and bond markets

* Select profitable individual stocks and bonds

* Devise powerful portfolio management systems

Table of Contents

Genetic Algorithms: Survival of the Fittest.

Neural Networks: Brainware.

Chaos Theory: The Order Behind Disorder.