AI and Stock Markets
Machine Learning has always fueled the fantasies of Wall Street. After all, AI detects faces, drives cars, beats the World Champions at Chess, Go, and so on. Its application to trading seems natural, doesn’t it?
“Artificial intelligence is to trading what fire was to the cavemen.”
That’s how one industry player described the impact of a disruptive technology on a staid industry. In other (less creative) words, AI is a game changer for the stock market.
“Machine learning is evolving at an even quicker pace and financial institutions are one of the first adaptors.”
When Wall Street statisticians realized they could apply AI to many aspects of finance, including investment trading applications, they could effectively crunch millions upon millions of data points in real time and capture information that current statistical models couldn’t.
A Chicago based company GreenKey Technologies’ AI for trading uses speech recognition and natural language processing technology to save traders time searching through conversions, financial data and notes. With the company’s platform, financial professionals are using AI to sift through, and access, notes, market insights and trending companies in real-time. That’s a lot of progress already in this field, considering that AI has got trending in just the resent times.
There are basically two types of analysis in trading: One is fundamental analysis and the other is technical analysis. Fundamental analysis uses revenues, earnings, future growth, return on equity, profit margins, and other data to determine a company’s underlying value and potential for future growth, while Technical analysis of stocks is the study of the historical data of stocks, including volume and price. The aim of technical analysis is to use past behavior of the stock to predict the future price. Well, isn’t AI well-known for prediction!?
So now that you got the basic idea about what the current market position of AI in trading is, and how it can help us in technical analysis. Computers are fast as compared to humans, obviously. If we can make them do the technical analysis themselves with the help of AI, then the process of deciding whether to place a trade, or whether to reverse the position, etc. can be made and executed every second! Markets are very volatile in nature, by volatile, I mean that the prices of stocks changes every millisecond and most of the traders know what to do, but by the time they start the execution, it’s too late… That’s how markets are.
So as you can see, there is a huge potential in AI in the field of Stock Markets, some companies are already practically using AL in their operations, and so can we!
I hope that I have solved your curiosity about the scope of AI in Stock Markets as well as helped you gain some additional knowledge. Thanks for reading till the end.
