STEP 2 TRAINING THE RAT TRADERS

The next step was the rats' training. I produced about 800 different ticker tracks of different market situations. Since I did not want to render the whole story too complicated, I only used the USD/EUR future to turn the rats into experts in this specific market segment: other rats though may be educated in other markets as well. The training took about three months. I started with 80 Sprague Dawley laboratory rats, 40 males and 40 females, with the intention to cross the best of them to genetically create the best traders through select breeding. The training environment was a so called Skinner Box, widely used in experiments and industry for behavioral experiments with animals. The rats were separately trained for five hours daily (thanks to Anna, Gerda, and Dirk who did a great job in the past months). Every day the rats were confronted with 100 different ticker tracks; the goal was making them seek out sound-patterns that humans are not able to recognize and predicting the next market move after the last sound heard. ( I am currently working on a website enlisting human training programs as well). Each time after listening to a sound, the rat had to choose between pressing either a green or a red button, green for "long" (if the prices were expected to move up), red for "short" (if they predicted a decline in prices). When they were right they received a small amount of food (the good rats became fat very fast); when they took the wrong button, they received a minor electric shock. Very soon it showed that some rats were doing outstandingly well: they developed a good ability to remember the patterns they were listening to; we needed them to react to real time data though. To get there, we developed the following training cycle:

week 1 training with historic ticker tracks 1 to 200

week 2 training with historic ticker tracks 201 to 400

week 3 training with historic ticker tracks 401 to 600

week 4 training with historic ticker tracks 1 to 200

week 5 training with historic ticker tracks 201 to 400

week 6 training with historic ticker tracks 401 to 600

at this point the rats from the first round that did not improve were sorted out; 32 rats stayed.

week 7 training with historic ticker tracks 1 to 200

week 8 training with historic ticker tracks 201 to 400

week 9 training with historic ticker tracks 401 to 600

again we excluded the non-improving candidates from the training group; now we had 22 rats left.

week 10 training with historic ticker tracks 601 to 700

this was the real test now: the future traders had not heard the tracks before. We had to sort out another 6 rats

week 12 training and testing with historic ticker tracks 701 to 800 without repeating any of the tracks during the training

we were now able to make out the really gifted traders and eventually ended the test series with 4 reliable rats:

Mss. Kleinworth

Mss. Coutts

Mr. Morgan

Mr. Lehmann (we were quite surprised to find he made it)

...the training was almost finished; the performances of the top 4 rats had turned out to be comparable to those of the world' s best fund managers. Their ability to recognize sound patterns generated from the market's ticker tape was incredible. And the rat traders also hold another advantage: unlike their human counterparts, they are not likely to be distracted from news or economy fundamentals, their own personal or their bank's financial status.

STEP 3 DEVELOPING A PEDIGREE

After extensive training, we wanted to find out if the talent in trading might be rooted genetically and crossed the top traders with each other. After only 20 days, we had 28 new rats (15 males and 13 females) , and we soon started to train again (even reducing the training time). The results were astounding: the second generation of top traders had a much better performance than their parents, but undoubtably, further research will be necessary to confirm this finding of ours.