It should come as no surprise to traders that Artificial Intelligence has long since infiltrated the forex market, focussing on price movements in trends, helping traders trade around the clock, and trading on behalf of traders.
Trading is about making the right investment and trading decisions in the financial markets so that the trader can make a profit when speculating on price movements.
Technical analysis consists of statistical data, historical market conditions, and certain reactions from other participants in the financial market. While most traders have had to conduct their technical and fundamental analysis manually, computers, artificial intelligence, and algorithms have taken over this tedious and mundane task says Global Forex Review platform – Forexrecommend.com
Trading robots have been working in the stock market, forex market, and several others, for years, focussing on identifying price movements, trends, and the ideal entry and exit points in each.
How will AI change forex trading forever?
In a study that was conducted by JPMorgan in 2020, it was found that 60% of all forex trades totalling $10 million were done using algorithms, or forex robots. The market for algorithmic trading is set to increase to more than $4 billion by 2024, bringing the total volume to over $19 billion.
The dynamics are important, and the main task of any profitable trader is to make a profit from speculating in assets, with risk management as the foundation of each trading strategy employed in the markets.
Algorithmic trading using artificial intelligence brings about three main advantages:
- Reducing risks significantly in a market with high volatility
- It provides the ability to analyse the potential impact of trades on financial markets, which is useful for Hedge funds and institutional investors who control large sums of capital that have a visible effect on price movements in the forex market.
- It also has the fundamental advantage of protecting traders from their emotions while they trade in different markets.
More than 80% of trading operations in the United States exchanges are closed using different algorithms, and the move towards using more algo aligned trading strategies is significant and increasing.
There are many companies involved with developing fully autonomous trading machines that combine the following components with AI:
- Machine learning – which is a trading platform solution poised to improve performance using a combination between AI and machine learning
- Deep learning – which is analytics that use neural networks alongside AI to copy the trader’s decisions and streamline them more accurately by using algorithms.
- Customized AI tools that integrate the latest innovations and developments in AI with algorithmic trading technologies.
- Predictive analytics – that use statistics, data, and various algorithms to find the likelihood of certain trading decisions by using dynamic predictive programming alongside several intelligence tools.
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The widespread adoption of AI and machine learning technologies and tools can help traders and investors worldwide, helping them streamline their trading decisions, helping them achieve their trading objectives more easily while reducing their exposure to various risks.
This also helps beginner traders even the playing field and shorten the learning curve involved with becoming profitable forex traders.
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