Trading Education

Does AI fail to work well with with financial market trading strategies?

AI does not fail! It’s just the beginning.

AI can be extremely beneficial for traders as it analyzes information at incredible speeds and is not affected by human emotions when trading.

Many believe AI is the trading of the future and perhaps humans will be rendered useless due to the superior abilities of AI. For now, we should view AI as a valuable tool to cooperate with in order to maximize our chances of profit in the market.

AI does have its limitations.

  • Inflexible

    • AI is usually given a set of parameters to act upon. For example, it is taught to react a certain way when faced with situation X. It does not recognize major market crashes and will stick to its guidelines no matter what. Others claim that AI is unable to recognize patterns on a human level due
  • Inhuman

    • It seems obvious, but AI cannot account for various facets of the stock market like insider trading.

However, it has more instrumental benefits which makes it a necessary tool for a profitable trader.

  • Statistically accurate

    • AI programs don’t make mistakes statistically. They provide accurate and real-time data for day traders to act upon.
  • Unbiased

    • AI does not bring human biases into its analysis of stocks and currencies. For example, behavioral bias like the bandwagon effect(when one simply follows what the majority of people are investing in)and emotional bias like overconfidence bias(when one believes he or she is at a higher level of investing than others because one works in a specific sector that correlates to the market)

Conclusion: There are many tools that a profitable trader needs to possess like analysis, execution, and experience. AI is great at analyzing the market and presenting its results in forms of signals or alerts. Using AI does not immediately make you a profitable trader, but it definitely increases your odds of success significantly.

I like to use these two AI tools – AI tool for FX\Futures – trade ideas and macro-news coverage is an AI program that takes scheduled news and studies how it affected the market when it happened in the past. For example, you are able to see how below-expected unemployment rate release affects the S&P 500. This program provides you with trade ideas that are based on statistics and suggests actions for you.

Source: ( backtester. Get real time, actionable insights)


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