As we move into the future, our trading processes will become more and more efficient due to artificial intelligence and algorithmic trading. Algorithms are already a part of our lives. Think of social media, the internet, advertising, industry, financial markets, and every other application where computer systems and processes are required to carry out day-to-day data collection and execution.
You may ask, what is an algorithm? It is a set of instructions that a computer follows to complete a job. It can be compared to someone baking a cake. The only difference is that the recipe is the set of instructions, and the baker is a computer.
The finance world is making use of algorithms for trading and investing in the stock markets. How does this affect your role as a trader in the future? Quite possibly, computers will be trading for you!
Will the stock market shift to machine learning?
I certainly believe so, as machine learning is more efficient. Artificial Intelligence will reduce the risk in high volatility markets, remove the emotional side of trading, and collect data and learn at a faster pace than human beings.
The advantage that machine learning has over algorithmic trading is that artificial intelligence can learn on its own. In contrast, algorithmic systems are a man-made set of rules that computers are programmed to follow. The trader can watch and see the machine learn and advise, allowing the trader to understand why the AI builds up the strategy for entering or exiting a trade versus the black box experience of algorithms.
For autonomous driving to be successful, two key components are required. One being Maps for direction (e.g., Google Maps or Waze), and the second being driving skill for decision making (Waymo or Tesla FSD). Similarly, for autonomous trading to be successful in its decision-making, it requires the following components: fundamental analysis for price direction and technical analysis for price action.
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AI Autotrade is a skunkworks machine learning research and development company building fully autonomous trading machines that combine deep researched price action indicators with next-generation deep reasoning AI models using Graphs inspired by Causal AI.
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