Don't Let AI's Overconfidence Fool You
By Dave Mabe
There's no question that AI has been game-changing for systematic trading.
But just because Claude is an expert coder doesn't make it an expert trader.
I'm seeing so many traders fall into this trap.
It's no different than doctors and lawyers confidently jumping into trading, thinking the success they've had in one area will quickly translate to trading. (I've got news for you!)
But techie types are making the dangerous assumption that Claude's coding skills translate to trading.
Here are a few examples I've seen just in the last week:
A trader used Claude to optimize a strategy, and the final version had over two dozen rules applied (!!), and Claude said it wasn't overfitted
Another used Claude to do some "quick analysis" on a trading strategy. Two weeks and millions of tokens later, he abandoned the project entirely because Claude slowly created an unsupportable mess - one small, overconfident step at a time
I ran a test. I took one of my best strategies and had Claude analyze it. After burning several tokens, Claude confidently told me the strategy has no edge. This strategy has produced multiple 6-figure years on its own!
I suspect this is only the tip of the iceberg.
If you've been trading a while, you can spot the overconfidence and quickly steer Claude in the right direction.
But if you're a new trader, it's almost certainly going over your head.
The best coder I ever worked with had a great mantra he used when he was building something: BE PARANOID.
That same mindset works well for building trading strategies, too.
But that mindset doesn't come naturally to AI - in fact, the opposite.
I have some ideas on concrete steps you can take to prevent this.
Stay tuned...
-Dave
P.S. Amibroker users: are you trying to use Claude to create a backtest only to discover how bad the LLMs are at coding Amibroker's language? You're not alone! You need my Amibroker AFL Course. It comes with a demo strategy that serves as the perfect starting point for any strategy you want to create. Get instant access to the Amibroker AFL Course