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    Experimental algorithm trades stocks based on superstition

    Experimental algorithm trades stocks based on superstition


    Shing Tat Chung's Superstitious Fund Project is an experimental stock fund that makes trades based not on market data or trends, but on lunar cycles, numerology, and other superstitions.

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    NASDAQ times square (STOCK)
    NASDAQ times square (STOCK)

    You could make investments based on market trends or finely tuned financial data, or you could just leave it all up to Shing Tat Chung and his Superstitious Fund Project — an experimental fund that executes trades based on lunar cycles, numerology, and other superstitions.

    At the core of the fund is an Automated Trading System affectionately known as Sid the Superstitious Robot. Sid isn't a robot, per se, but a computer program that buys or sells stocks using a superstition-based algorithm (source code available for download here). The bot won't buy any stocks on the 13th of the month, and avoids the number 13 altogether. It also adjusts its behavior based on the lunar cycle, interpreting the new moon as a sign of auspice, and the full moon as a bad omen. Sid starts selling its shares with more alacrity as the full moon approaches, for fear that it may have drastic effects on investors and the market as a whole.

    "an unproven, highly speculative experiment"

    Chung, 25, originally launched the project out of his own interest with superstition, which he wrote about extensively on his personal blog. Over time, though, the recent Royal College of Art graduate realized the potential for larger, real-world experimentation, and decided to bring his fund to the FTSE100. "I wanted to poke fun at our superstitions," he told the BBC. "But I also wanted to highlight our irrational nature in a way that is less critical and more about encouraging dialogue."

    The Superstitious Fund began trading on June 1st (on the advice of a soothsayer), and will remain active for one year. Chung plans to benchmark its performance against other stock indices,and, in the event that he sees gains, will pay dividends to his investors. Thus far, though, things have been rather rocky. In the three weeks since Chung's fund went live, its value dropped by 12 percent from its starting point of £5,000 ($7,821). The NASDAQ100 index, by comparison, rose by four percent over the same period.

    The fund has since rebounded a bit, though Chung has gone out of his way to remind investors of the risks at stake. Each e-mail he sends out includes the following disclaimer: "Please be aware, that this is an unproven, highly speculative, experiment and a project with the risk of total loss."