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Artificial Intelligence in trading: The lowest-hanging fruit

Part I

Alternative data means more accurate price forecasts and better, less risky signals

Many years ago, to find out the financial results of a chain of stores, one had to wait for their earnings announcement. Today, the analysis of satellite images of parking lots makes it possible to estimate whether there are more or fewer customers and, on this basis, to forecast the results.

Entry and exit — minimizing costs and adverse moves

One of the main problems that most institutional traders complain about today is the difficulty in finding liquidity.

Better assessment (view) of the situation while taking positions

While taking positions, a better view of the situation comes with new tools. However, this improvement does not end with market entry. Social media sentiment analysis and automated news analysis gives you a picture of market interest in a particular instrument.

Availability of the new solutions

The tools described here are available to the largest funds. However, their development is expensive and requires teams of good specialists (machine learning, social media analysis, liquidity analysis, microstructure of markets and its evolution over time).

Conclusion

Thanks to alternative data, we see a shift from forecasting to nowcasting. We also have better forecasts of supply, demand and price behaviour. As a result, trading signals are better and less risky.

New to trading? Try crypto trading bots or copy trading

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