How AI Algorithms Are Changing Trading Forever
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In general, trading is about making decisions on transactions with assets in order to make a profit. All technical analysis is based on statistical data, past market behavior, and reactions. Consequently, the analysis and search for some market patterns can be performed not only by person but by computer and artificial intelligence.
It is no secret that trading robots have been working in the stock market for a long time, focusing on price movements in trends and within channels. According to a 2020 JPMorgan study, over 60% of trades over $10M were executed using algorithms. The algorithmic trading market is expected to grow by $4 billion by 2024, bringing the total volume to $19 billion.
These are very large numbers, but it is even more important to pay attention to the dynamics. What has such an impact on filling the market with trading robots and algorithms? Since the main task of a trader is to make money from speculating in assets, and risk management is the cornerstone of every successful trading strategy, let's look for the answers here.
The Aite Group in its report "Hedge Fund Survey, 2020: Algorithmic Trading" argues that the main reason for the growing popularity of algorithms in trading is to try to reduce the influence of the human factor on the market due to its high volatility. The economic fallout from COVID-19 has seen a record-breaking drop in the American, European, and Chinese stock markets. And only a few months later, measures to stimulate the economy were able to stop the fall and reverse the downtrend up.
Thus, we get the first task of Algorithmic Trading - risk reduction in a market with high volatility. The second global advantage of algorithmic trading lies in the ability to analyze the potential impact of trade on the market. This can be especially useful for Hedge Funds and institutional investors who handle large sums of money with a visible effect on price movements.
The third fundamental advantage of trading algorithms is protection from emotions. Traders and investors, like all living people, experience the emotions of fear, greed, lost profits, and others. These emotions have a negative impact on performance and results. For example, on the eve of the 2008 global financial crisis, financial markets were already showing the first signs of impending disaster. However, the majority ignored the obvious signals, experiencing the euphoria of the bull market that has been going on since the mid-2000s. Algorithms solve the problem by ensuring that all trades follow predefined rules.
Institutional investors understand these benefits. Already, about 80% of all trading operations on US exchanges are closed using algorithms. Now move on to companies that can offer these opportunities to private investors. And the first serious results are already there. RegalX is such a trading platform already using this technology.
AI Autotrade, a subsidiary of RegalX and Regal Assets, has been researching the problems of trading in financial markets for many years and has found solutions in automation, machine learning, and the development of trading algorithms. Regal Assets is a US-based company that provides investors with access to a wide variety of asset types, including cryptocurrencies, precious metals, commodities, forex, and more. Regal Assets is included in the Inc 500 list of the fastest-growing US companies. Regal Assets works with Coinbase and is licensed to serve UAE clients.
Now AI Autotrade is developing fully autonomous trading machines that combine technical analysis with AI, self-learning algorithms, whose task is to manage deposits in order to make a profit. The main directions of AI Autotrade are:
Machine Learning. A ready-to-use automated trading platform solution that improves performance using machine learning and AI.
Deep Learning. Analytics tools that use neural networks and AI to copy the decisions of a living person and use them much faster and more accurately using algorithms.
Custom AI tools.Integration of the latest advances and developments in the field of AI in algorithmic trading technology.
Predictive Analytics.Using data, statistics, and algorithms to find the likelihood of trading decisions using dynamic predictive programming and advanced intelligence tools.
This allowed AI Autotrade to create a complete ecosystem of products for traders and investors who trust proven technology and understand what the future lies in.
The adoption of algorithmic trading can reach a wide range of traders and investors. More importantly, these are not bots from unknown developers or automated trading signals from newbies in this business. Now it seems private traders have access to more advanced machine learning systems using algorithms that are transparent and which appear to have been developed by really strong market players. And one such company is RegalX with its AI Autotrade technology partnership deep learning trading tool. Its structure, approach and results really impressed us.