Traders can’t predict the market but maybe their faces can

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OPINION: US researchers have embarked on a study using facial-recognition algorithms to track the expressions of traders.

The saying goes that our eyes are the window to the soul. Perhaps over time they’ll serve a less romantic purpose, as windows to making money.

“The market is driven by human emotions,” says Mario Savvides, the project’s lead scientist. “What came to us is, can we abstract things like expression or movements as early indications of volatility? Everyone is getting excited, or everyone is shrugging their shoulders or scratching their head or leaning forward ... Did everyone have a reaction within a five-second time frame?”

His system will also track a trader’s gaze to see if they’re talking to a colleague or looking at their screen, and note if their peers are doing the same thing. “We have a whole toolbox of searching algorithms that we’ll be testing to see if they correlate to a market signal,” says Savvides. “We are searching for needles in a haystack.”

Years back, trading floors were loud places where people would often talk on three or four phone lines at the same time; now many communicate over chatrooms and talking is minimal. “If you’re doing a business deal over Zoom, can you have an AI read the face to tell if someone is calling your bluff, or being a hard negotiator?” asks Savvides. “It’s possible. Why not?”

 

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