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The future of trading belong to Artificial Intelligence

Renato Zamagna
Nov 15, 2018 · 4 min read

Computing already revolutionized financial trading once, it facilitated enormous numbers of calculations in a fraction of a second, and to track markets that shift in light speed. Now AI trading systems are poised to foster a second wave of innovation, one that will be the most significant transformation in finance history.

Ironically, AI and finance are made for one another, one could even go further and call them “soul mates.” Machine Learning and different techniques created new systems to spot patterns which the human brain is not capable of, and since finance is quantitative, to start with, it’s laborious not to notice traction. Financial corporations have conjointly endowed heavily in AI in the past, and many others are starting to investigate and implement the financial applications of machine learning (ML) and deep learning to their operations. The conjunction of Artificial Intelligence and Stock Trading, for instance, definitely is not a brand new development. Unfortunately, the access to its possibilities and benefits have traditionally been mostly restricted to giant corporations. Luckily, this reality is changing as AI becomes more mainstream.

AI conquers Wall Street.

In 2010, high-frequency and algorithm trade accounted for 60% to 70% of trading in the US alone. By 2014, this number rose to 75%. By 2017, JPMorgan reported that traditional traders represented a mere 10% of trading volume.

In 2016, the Hong Kong company Aidiya, led by Ben Goirtsel started a hedge fund that performed all operational transaction through artificial intelligence solely, without any intervention of humans. “If we all die, it’ll still continue to trade,” — Goirtsel remarked

In 2017, Wall Street had its first 100% AI-powered Equity Trading Fund (ETF). In the first week of operations, it went up by 1 %, consequently beating the S & P 500 index. Remarkably, by August 2018 its shares rose by 20%. ETF operates on the premise of IBM Watson, a supercomputer processing and analyzing the news and reports related to 6000 American companies. Additionally, Watson continual learning capabilities examined it’s own performance, in the case of unprofitable transactions, the algorithm would learn from its mistakes to make more accurate decisions in the future.

Artificial Intelligence can revolutionize cryptocurrency trading

The high emotionalism of the cryptomarket ecosystem has already become a topic of study by developers who are attempting to come up with an Al-based solution to increase profit returns. One of the first steps taken in this area was the creation of models that use a neural network to make cryptocurrency valuation predictions.

Sentiment analysis

Another way crypto trading is being influenced by AI and ML is through the analysis of sentiments. Sentiment analysis is the processing of enormous volumes of information from various sources like articles, blogs, comments, social media posts, even video transcription to work out the market’s “feelings” regarding a topic — to determine if it is positive, neutral or negative.

Forecast & Predictions

Neural networks endlessly supply increased accuracy. Neural networks make predictions associated with crypto markets remarkably faster. Their nature is to crunch information of cryptocurrency exchange rates constantly. Which are then used to forecast market movements by minutes, hours and days.

Blockchain Analysis

Both AI and blockchain are highly technical, and it appears that there is a consensus by computer scientists that these technologies will have a significant impact in the crypto and traditional financial markets alike in the next 5 to 10 years. The use of both technologies may alter the business and tech paradigm considerably enough to oblige business leaders to take action regarding developments in these areas.

Fundamental Analysis

Fundamental analysis is employed by both cryptocurrency and stock traders. In fundamental analysis, investors apply correlation to a coin or a stock valuation to range qualitative and qualitative factors. Fundamental analysis is used in the stock market to gage macroeconomics, such as the health of the market and the companies that operate in it. In this regard, crypto and stocks have many resemblances. In addition, the matter that a project is attempting to unravel and the core team behind it is also taken into account.

The integration of cryptocurrency and AI will make the execution of transactions limitless, easier, and much more diversified than ever. It will become an infatuated and trustworthy network. The volatile atmosphere of the market will be more efficiently analyzed by machines rather than humans since AI enabled systems are able to make market predictions accurately. With Artificial Intelligence, all industries, whether informational, technical or operational will become interdependent and interconnected. The upkeep of gigantic sets of data and the fast processing of it will be the missing link in the world or cryptocurrency trading. Providing a much-needed level of certainty to make the crypto economy much healthier and adoption-friendly. Paving the way for the future of finance.

Let’s keep in touch!

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We look forward to hearing from you!

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