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How has machine learning revolutionized forex trading

6th January 2022 Print

Since the use of broadband and high-speed fiber optic cables has become the norm, Forex trading platforms have been among the first to introduce cutting-edge technology in the Internet and software. The days are gone when traders would gather on stock exchanges and shout out their trades - almost 99% of traders now use electronic trading platforms. At the same time, a change is now taking place that is both exciting and daunting - the introduction of artificial intelligence (AI).

Artificial Intelligence

Artificial Intelligence and Machine Learning will be fundamental to the next phase of the Forex market, which will eliminate the need for human corrections and interventions. Robots will learn to overcome the risks associated with closing deals as they learn from the results of each individual deal they execute. They will become as ruthless as they are aggressive, and will not hesitate in their algorithmic decision-making process. In addition, the machine does not need to sleep, eat, take a coffee break, etc., it will be able to make transactions 24/7 without interruption.

Artificial Intelligence in Everyday Life - Internet of Things

Today we have Apple's Siri, Microsoft's Cortana, and Google Now's Google Inc., and the latest in the lineup, Alexa's from Amazon from all our mobile devices. The progress is visible and nothing can stop this - especially considering the fact that the internet is rapidly developing.

How can artificial intelligence change Forex or stock markets?

Wall Street regulators, supervisors and traders see the potential for using AI for market surveillance. Bill Nosal, Nasdaq's chief business development officer responsible for the exchange’s AI adoption efforts, said,“ We do not use machines in full power in terms of monitoring trading. "Exchange officials hope that AI will help detect fraud on the exchange faster than the current system."

The same can be said about the Forex market. Right now there are a lot of trading robots and automated programs that make the task easier for traders. Expert advisors are gaining a foothold in the industry and they are progressing step by step. You can check the best Expert Advisor for MT4 by Elite Currensea available on this website that has everything you need to conduct the trading process precisely and carry out an impeccable analysis.

Can AI help identify scammers in the market?

There is no doubt that AI can assist Wall Street professionals in detecting and even preventing frauds such as "layering," which involves placing large numbers of orders quickly and then canceling them in order to manipulate the price of a stock. 

Will a machine ever completely replace Forex traders?

This, of course, is more of a rhetorical question. Most likely not and there are many reasons for this - in fact, too many to describe everything in one article.

In general, there will be people who successfully trade on the basis of fundamental models, in addition, machine learning and other strategies will be developed and implemented by people. In addition, core models will be combined with elements of machine learning and AI in the future.

Machine learning has already changed the financial markets as there are companies and individuals who successfully use automated trading strategies. These models can capture complex, non-linear relationships between factors that are difficult for humans to detect.

Trade automation

With the advent of the algorithmic trading system, over the past decade, we have seen more and more trading automation. This trend will develop at an ever faster pace. Your broker's contact center operators may be replaced by smart robots, and your trading terminal will begin to understand voice commands and gestures.

People will start selling automated trading systems and traditional consulting services will lose their appeal. Large hedge funds will start using trading robots instead of humans. The list is endless, it all depends on your imagination.

Changes in trading hours

The changes will undoubtedly happen very soon, the duration of the exchange session in the region of six hours is not enough for traders. As trading becomes more automated, there is a high likelihood of trading 24/7, especially in the derivatives segment. The same thing is happening today in the foreign exchange market. This will lead to increased trading volumes, which will benefit exchanges and brokers.

AI-driven new derivatives?

On almost all exchanges in the world, most transactions take place in the derivatives segment such as futures and options. These financial products offer more flexibility than underlying securities. I foresee an increase in the number of derivatives products in the next generation. How about Tier 2 stealth securities or Tier 2 derivatives ?! There may also be derivatives that expire weekly, or categorization of these products based on risk.

There will be many financial derivatives in the coming years as AI software develops. This would be a logical stage in the development of exchange trading.