How AI Is Transforming The Art of Stock Picking
Every revolution experienced by humans has been centred on a particular invention or discovery. Fire, wheel, steam engines, assembly-line manufacturing, and computers-all of these have transformed humanity’s prospects. Artificial Intelligence is considered by many to be the next addition in this list of revolutionizing ideas that change our being as we know it. It has already registered a stellar influence on every sphere and proven to be a game-changer for the stock market as well. Trading Patterns Trading on the stock market is all about making a profit — there is no room for any kind of emotions. Most of the wrong decisions in trading or stock market are taken because of human emotions, as demonstrated by scores of business management tomes and Hollywood flicks. However, a machine can make complicated decisions and execute trades at a rate which humans cannot match. Some of the major factors that play a key role in trading decision making are: Price variationsMacroeconomic data volume changesProphesising based on news All these parameters can be used effectively by an AI-powered machine or a program. A recent study by UK research firm Coalition found out that electronic trades account for almost 45% of revenues in cash trading. The AI-powered analysis is fueling new investment ideas and building unconventional portfolios. The power of analyzing millions of data-points across a vast period of time has enabled analysts to forecast market fluctuations with greater accuracy and mitigate risk while increasing returns. Complex trading patterns can be analyzed at a massive scale across multiple markets. A continuous compliance risk assessment is also provided. With speech recognition and Natural Language Processing thrown into the mix, it becomes easier to search through conversions and notes. It also increases efficiency across large and small stock exchanges. AI enables enterprises to develop intelligence platforms that can churn massive sets of data to run easy-to-understand, ranked predictive models. AI-Driven Democratization The technology also has the power to democratize the understanding of stock trading and make it more engaging for end-users. It also leads to cost-savings as the need for professional expertise can be kept to a minimum. Analysis, operations and active query management, AI-enabled platforms can perform this task simultaneously. It optimizes operational efficiency in stock analysis like never before. For instance, today an investment strategy can be easily created by developing an intelligent asset allocation system that takes into account several factors including the behavioural trends of the user and employs deep learning to predict every asset in a particular portfolio. At a macro-level, AI can help in building a cause-and-effect understanding of companies, markets, economies and the world. It has the power to bring in data from non-conventional sources such as newspapers, social media posts, etc. to predict the impact of a particular action on a stock. Outlook Financial firms across the world are already in a race to develop and implement AI-based programs to make trading more profitable and efficient. As new tools continue to enter the trading industry, more and more data will be able to be manipulated; not only from historical data but also from other sources like social media. Actionable intelligence achieved through engagement with experienced traders, analysts and engineers and these great new machines can enhance the world of trading to an unprecedented effect. Advanced authentication, encryption, intuitive interface, enhanced customer experience, the world of stock trading has benefited extremely through new-age technologies. It is like having a thousand, wise traders focused on enhancing the performance of every single stock of yours. With minimum hassle, AI promises the best performance out of each stock, ensuring that you smile broadly to your way to the bank or trade with minimum risk. This article is a part of the AIM Writers Programme. If you wish to write for us, email us at info@analyticsindiamag.com
Every revolution experienced by humans has been centred on a particular invention or discovery. Fire, wheel, steam engines, assembly-line manufacturing, and computers-all of these have transformed humanity’s prospects. Artificial Intelligence is considered by many to be the next addition in this list of revolutionizing ideas that change our being as we know it. It has […]
Trading on the stock market is all about making a profit — there is no room for any kind of emotions. This is where AI comes in handy.
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["AI", "artificial intelligence", "deep learning", "analytics", "Aim", "R", "programming_languages:R"]
Rohit Ambosta is a part of the AIM Writers Programme. He is the associate director and CIO at noted Indian stockbrokerage firm. He drives the company's digitalization strategy which includes process optimization and automation. He also takes care of software development, mobile software development, internal risk management, BCP/DR and IT, among others.