Following extensive machine learning (ML) training in a back-testing environment, the firm just started applying the technology to live data, with an extremely high level of predictive success in anticipating futures market moves. CQG made the announcement on the first full day of FIA Boca, the International Futures Industry Conference.

Based on the firm’s deep experience in analytics, mathematics and market intelligence, the new ML initiative aims to offer retail traders and buy-side firms, including proprietary trading firms and hedge funds, unprecedented tools for identifying new trading and analytics opportunities, guiding trading strategies, and managing their positions. CQG has been exploring the field of AI for the past year in the context of solving for its clients’ challenges, testing the technology in a state-of-the-art multi-platform lab. Last week, for the first time, the company tested its next-generation machine learning toolkit in a live trading environment and achieved 80% predictive accuracy - matching the results attained in the back-testing environment.

CQG CEO Ryan Moroney said: "In early 2023, we decided we wanted to do something different in machine learning and AI that leveraged our unique position in the market, building off our comprehensive database of historical trade data and analytics in a way that could help our clients and prospects analyze, predict and trade markets through a new lens. We built a lab, and Kevin Darby - our Vice President of Execution Technologies - has done an extraordinary job of turning that effort into an exciting reality with results that have significantly surpassed our expectations."

Darby said: "We first had to solve multiple real-world challenges, such as storing and curating terabytes of historical market data while retaining the ability to make decisions in microseconds in real-time environments. We built bridges between the current ML infrastructure, based on the Python language, and the reliance of the financial industry infrastructure on C++. We also needed to recast the traditional ML training pipeline to optimize for generative time series prediction to estimate conditional probability distributions in a mathematically satisfying and stable way."

He said the firm’s AI in a live environment was consistently able to predict with 80% accuracy whether the next movement in the E-mini S&P 500 futures contract would be up, down or unchanged.

Moroney said CQG has already identified multiple uses related to algorithms (algos), charting and research and is starting to explore other applications with key partners.

He said: "What we’ve built is portable. We can give a firm a set of encrypted files, and they can see how our technology predicts moves in liquid futures contracts with a high rate of accuracy. They will be able to use our ML lab, apply cloud computing resources and create their own models, either leveraging our models as foundational or making their own from scratch using our historical data and ML toolkit. They can then use CQG for charting and trading with those models. We have extremely smart, creative clients. This is a truly innovative breakthrough, and we’re looking forward to collaborating with them on the potential uses we haven’t even considered yet."

Moroney said: "For the past 40 years CQG has built sophisticated, intuitive tools for customers to better visualize and analyze market data to make smarter trading decisions. We view our new ML offering as the next breakthrough for mission-critical trading tools delivered by CQG."