  The following text and pictures illustrate the methodology involved in training laboratory standard rats in trading in the foreign exchange and commodity futures markets. STEP 1 DEVELOPING TICKER TRACKS
The first step is the transformation of price data into sound, so called ticker tracks. We use tick data from various futures and foreign exchange markets in
order to generate sound in accordance to the real time price data. The
relevant literature indicates that rats especially respond to piano
sounds, so we are using these as a base for the ticker tracks. The Sonification Software is provided by the School of Psychology at the Gerorgia Institute of Technology.
  a classic skinner box for behavioral science experiments. The sound is modulated in correlation to the price movement: if the price goes up, the pitch goes up as well, always depending on how strong the up-movement had been. When prices drop, the following sound's pitch is reduced depending on how strong the price has fallen. Always in regard to how long it took for the next trade to happen (time between trades can vary between 1 second and 1 minute occasionally), I used different kinds of piano modulations. After some tests, we found that our probands reacted best to 25 price ticks or sounds, so one track was to take 10 to 20 seconds accordingly, depending on the market movements. The following illustrations show some of the charts and historic real time data used; the viewer might also get an impression of what the sound files looked like. This way we were able to listen to the Sound of Futures Markets. Keep in mind that the data used are only tick data, representing only the last 3 digits of the futures quote.  TICKER TRACK NR231 EUR/USD FUTURE MAY22nd 2006 15:22  TICKER TRACK NR287 EUR/USD FUTURE SEP01nd 2006 10:42  TICKER TRACK NR320 EUR/USD FUTURE SEP09nd 2006 11:01  TICKER TRACK NR440 EUR/USD FUTURE JAN28nd 2007 18:52  TICKER TRACK NR442 EUR/USD FUTURE FEB12 2007 08:20  STEP 2 TRAINING THE RAT TRADERS From the beginning, the future brokers are exclusively trained in the market segments they will also be working in after their training has been accomplished. The basic training takes about 3 months. The environment is a so called Skinner Box, widely used in experiments and industry for behavioral experiements with animals. The rats are separately trained for 5 hours daily. Every day, they are confronted with 100 different ticker tracks. The goal is to make them find out sound-patterns that humans are not able to recognize and to predict the next market move after the last sound heard. Each time after listening to a sound, the rats must choose pressing either a green or a red button, green for "long" (if the prices are expected to move up), red for "short" (if they predict a decline in prices). If their prediction prooves to have been correct, they receive a small amount of food, if the wrong button has been pressed, the failing candidates receive a minor electric shock. This is our usual training plan: week 1 training without sound, only get used to the skinner box week 2 training without sound, only get used to the skinner box week 3 to 12 training with historic ticker tracks week 13 selection of the best trading rats week 14 to 22 training with historic ticker tracks week 15 selection of the best trading rats week 16 to 26 specialised training STEP 3 DEVELOPING A PEDIGREE We are continuously crossing the best trading rats with each other in order to breed specialists in various markets for our clients. The second generation of top traders ususally shows a much better performance compared to their parents.      |