Erste Asset Management

First virtual chart analyst – bot learns to “look at” charts

First virtual chart analyst – bot learns to “look at” charts
First virtual chart analyst – bot learns to “look at” charts
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Tesla’s autopilot can detect road signs, pedestrians and other vehicles with the help of cameras installed in the vehicle. The key to this lies in computer vision, a special field of machine learning. The EAM has used this technology to create the world’s first virtual chart analyst.

I’ll believe it when I see it…

To recognize things visually is one of the first skills that humans learn. Although the processing of visual stimuli plays an important role in our lives, it often seems self-evident to us. In 1996, a computer was able to defeat a human in chess for the first time, but it was only later that machines “saw the light of day”.

Today, powerful processors and a flood of visual training data enable machines to recognize objects quickly and react at lightning speed, which pays off especially with autopilots and manufacturing robots.

Chart analysis – a dying art?

With the increasing quantification of the financial sector, chart analysis, one of the oldest tools for investment decisions, became less and less important. The basic assumption of chart analysis is that market prices are largely dependent on the moods of market participants, which manifest themselves in patterns in price charts.

In addition to a large number of patterns, the chart analyst’s intuition plays a major role in ensuring that prices are correctly forecast. As with a good craftsman, intuition is a skill that must be laboriously acquired over a period of years, unless you are a machine…

The world’s first virtual chart analyst

In consultation with a human chart analyst and with the help of about one million charts of stocks from the S&P 500 Index, Erste Asset Management trained the world’s first virtual chart analyst. A new algorithm developed by Google was used, which is based on deep neural networks and is also used in self-driving cars. The virtual analyst can be fed stock charts and, in addition to the probability of a positive future price trend, also provides a picture in which the forecast is “justified”.

Initial tests of the system delivered promising results.

Note: Dynamic analysis of the chart image from Apple. The number in the upper right corner indicates the probability of a positive return. Red areas indicate a positive development, blue areas a negative one. Note: Past performance is not indicative of future development. (Source: Erste AM)

Man vs. Machine?

The question arises as to whether machines will be able to make independent investment decisions in the future. With the current state of the art, this is not the case in the foreseeable future, since in addition to chart analysis, a large number of factors influence investment decisions that are difficult to automate.

However, robots such as the virtual chart analyst will certainly serve as a tool for human decision makers in the future. In order to be able to consider the individual needs of each customer in investment advice, a human contact person will continue to be necessary in the future.


Legal note:
Prognoses are no reliable indicator for future performance.


Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011. The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the Key Information Document can be viewed in their latest versions at the web site within the section mandatory publications or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the web site A summary of investor rights is available in German and English on the website as well as at the domicile of the management company.

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Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to § 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.

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