Home Artificial Intelligence How Will Artificial Intelligence Affect The Future Of Trading?

How Will Artificial Intelligence Affect The Future Of Trading?


Artificial Intelligence, a word combination which increasingly arouses vigorous debate. AI is persistently growing in all areas of our everyday life and business activities.

It’s already playing a big role. Today, we use some kind of AI every day: talking to Siri or Alexa,and enjoying smart technologies provided by the Internet of Things. As technology develops M2M interactions will rise, creating smart homes, safer self-driving cars and smart cities.

Financial markets are no exception. Artificial Intelligence is steadily changing the markets and our trading experience. We have only two options here: to adapt or be left behind.

Artificial intelligence vs. stock markets

Many financial institutions and retail investors have been using algorithmic, or automated trading, for more than a decade. It’snot‘real’ Artificial Intelligence, as it isn’t full automation, but rather using algorithms with a definite set of workflows and rules.

These algorithmic technologies are constantly being improved, and so have a strong chance of developing into true Artificial Intelligence soon. Once the algorithm adapts to market conditions and learns from past experiences, it will be able to make complete trading decisions. How about that!

Will the markets survive?

Markets play a fundamental role in our life: providing unbiased valuation and liquidity for various assets, commodities and stocks. Stock prices are constantly moving, being over- or undervalued, and investors try to make money out of these fluctuations.

Artificial Intelligence helps us consider numerous fundamental, technical and external factors in a fraction of a second, so that we can better predict an asset’s value.

However, what will happen to the markets when AI becomes intelligent enough to predict every market’s move, and the correct value of any asset on its own?

Moreover, this “superpower” will not be exclusive and won’t belong to any institution or individual. Assuming that all the Artificial Intelligence will reach the same conclusion when evaluating stocks, this might be the end of speculation.

The era of financial singularity

Imagine the situation, all trading decisions are made by Artificial Intelligence. Will there still be a place for humans? If all traders are substituted by smart machines, we will probably end up with completely automated stock markets.

The attitude to Artificial Intelligence may differ. Some are frightened by the idea that machines will replace humans, but others believe that the benefits of AI will outweigh the risks. Still, everyone knows that the rise of Artificial Intelligence is inevitable, and we should adapt, and use it to our benefit.

Artificial Intelligence is often seen as an oracle for investing decisions. Today, Wall Street giants are embracing AI technologies and heavily compete in attracting machine-learning talent, in an attempt to get ahead. For example, Goldman Sachs alone has posted 831 vacancies, requiring programming or data science experience.

Predictions generated by machines, are made faster, cheaper and more accurate. However, machines lack one very important trait unique to humans – judgement. To put it simply, AI proves to be effective when it comes to solving standard challenges with obvious objectives. However, in case of any complex, or out-of-the-box situation, only human judgement may help.

What’s next?

The way for financial markets to move on is by finding innovative insights, unique expertise and new talents that will help to make AI technologies, or prediction machines, better than existing ones.

Modern technologies have already made trading available to everyone. Some cutting-edge CFD trading providers have successfully implemented AI-based algorithms to analyse trader’s behavior. These insights helps traders reduce errors, increase profit and minimize losses. Sounds promising, doesn’t it?

Like any other powerful invention, Artificial Intelligence could lead to significant changes in the world around us. However, AI is still based on human thinking, knowledge and experience. Let’s use it smart.

No matter what trading tool or strategy you prefer, always bear in mind that many retail investors lose money when trading. Consider whether you can afford it.