Why Are LLMs So Bad at Trading?

I use LLMs a lot.

I think they're simultaneously the most overhyped and underhyped tech we've seen in a long time.

But are they good at trading?

The answer should be obvious, but here's some proof to show how bad they are at it.

Someone set up a trading contest - with real money and real trades - and pitted each LLM against each other.

Here's a snapshot of how it's going. Spoiler: they're all lighting money on fire.

This should not come as a surprise - there are several reasons LLMs are terrible traders.

The primary reason is that LLMs are trained using data on the public internet.

In that way, they're literally trained to follow the crowd and therefore lose money trading.

Just try finding an idea for a great trading strategy by searching Google.

There's a great lesson for traders here.

How is your trading unique? How is it different than what the masses are doing?

What is your process for creating more unique ideas for strategies over time?

LLMs are great for lots of purposes, but creativity isn't one of them (yet).

-Dave