Artificial intelligence in trading

Thanks to artificial intelligence algorithms, trading will change forever. Traders can analyze millions of data points and execute trades at the optimal price.

Everyone knows that trading robots have been working in the stock market for a long time. They focus on price movements within trends and channels. The trading robots have been designed to help traders who wish to use automated trading methods. This article aims to explain what a trading robot is, how it works and what its advantages are.

Trading robot: what is it?

A trading robot is a common term for online brokerage systems which helps determine whether to buy or sell a currency pair at any given time. This system can be fully automated and integrates with online Forex trading platforms or brokers.

In principle, you have to create a trading strategy and follow it manually. However, many users resort to computer programs to implement an automated trading strategy.

Sometimes called FX robots or simply “bots”, they are not physical robots. In fact, these are highly specialized computer programs which have been created to perform many different trading functions. These features range from telling traders when to trade to entering and automatically managing trades.

Commercial robots: how do they work?

Forex trading robots are automated software based on artificial intelligence that generate trading signals. Most of them work with MetaTrader, using the MQL scripting language. The latter, in fact, allows you to generate trading signals or place orders and manage transactions. Forex (FX) robots were designed to remove the psychological element from trading.

There are several types of Forex robots on the market, including:

  • a ready-to-use trading robot with its own integrated trading rules,
  • a system that the trader has designed himself to follow his personal trading strategy.

In fact, buying an automated trading system turns out to be much easier than creating one yourself. In fact, traders with limited trading experience should rather opt for a ready-to-use system.

It is important to do research before making a purchase and to make sure that the source is trustworthy. Some of these systems have a good reputation, but others may be below average or even scams. To deal with this situation, backtesting allows you to test what a trading robot can do using historical data. These can then be used to optimize the chosen strategy.

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The different types of automation in trading

Trading robots can be configured differently depending on the results you are looking for.

Fully automated

A fully automated trading system analyzes the market in search of opportunities of commerce. It carries out transactions electronically on behalf of its user, based on a set of predetermined rules. Automatically generate stop-loss, trailing-stop and profit target orders as soon as a trade is entered.

Semi-automatic

A semi-automatic system uses a computer program analyze the currency markets and look for trading opportunities. Again, it is based on a preprogrammed trading strategy. It then sends the user trading signals with entry prices, stop-loss orders and profit targets. It is up to the trader to decide whether to act on these signals and then manually enter the trade.

As with full automation, this system frees up the trader’s time by doing much of the preliminary work for him.

How is artificial intelligence changing trading?

According to the results of a study by JPMorgan in 2020, over 60% of transactions over $ 10 million were performed using algorithms. The algorithmic trading market will grow by $ 4 billion by 2024, bringing the total volume to $ 19 billion. Here are some ways AI is transforming trading.

Machine learning

The out-of-the-box solution of the automated trading platform improves performance through machine learning and artificial intelligence. Indeed, an AI platform can identify complex large-scale trading patterns across multiple markets in real time. Combine machine learning technology and the processing power of high-speed big data. Become a source of ongoing compliance risk assessment for customers.

Deep learning

Analytics tools leverage neural networks and AI to replicate human decisions and use them with much more accurate algorithms. The data science platform democratizes trading. She enables data scientists from all walks of life to produce algorithmic trading strategies which help solve investment problems. Thus, investing clients can reap the benefits of data science without the need for expensive in-house expertise.

Custom artificial intelligence tools

The AI ​​for trading can use speech recognition and natural language processing technology. It allows traders to save time in researching conversions, financials and valuations.

This approach allows you tointegrate the latest advances and developments in the field of AI in algorithmic trading technology. Provides protection for trading professionals through advanced authentication, encryption, hardware security modules, and more. With an intuitive dashboard interface, users can easily access account details, balances and transaction history.

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Predictive analytics

This approach uses data, statistics and algorithms to determine the likelihood of trading decisions. Dynamic predictive programming and advanced intelligence tools contribute to this. This move has created a complete ecosystem of products for traders and investors who trust proven technology and understand the future.

They can thus formulate an investment strategy by developing an intelligent asset allocation system that used deep learning to predict each asset in a particular portfolio.

Commercial robots: the advantages

Trading robots will therefore progressively revolutionize this area thanks to the numerous advantages they present.

Easy and transparent

Automated trading systems involve complex technical analysis, but offer traders an easier interface to control. Hence, the transparent approach and the ability to refine through backtesting becomes one of the advantages of trading using robots.

Shows

With backtesting, traders have the opportunity to do thisevaluate the performance of a strategy over a specific period of time. A Forex robot can analyze the markets, find opportunities based on predetermined parameters and trade according to its rules. These operations are performed in seconds.

A vibrant market makes it nearly impossible for traders to attend all major political events and central bank meetings. The trading robot can automatically execute the position and react to market movements. Traders can thus divide their time with their busy life without missing out on trading opportunities.

Diversification

The automated trading system allows traders to easily use multiple demo accounts with different strategies at the same time. Position execution, trade tracking and market research can be done by robots without wasting time. Therefore, the traders are able to do thisexplore new markets and open up new opportunities potential exchange.

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Discipline and emotional control

Traders often involve the emotional side of trading, which will ultimately affect decision making. Using a robot, doubts and other emotional reactions will disappear from the trading process. The operation, in fact, takes place automatically when the conditions are met.

Forex robots operate according to a set of predetermined rules which they follow in all circumstances. When humans trade capital, they sometimes struggle to overcome their emotions. For example, fear and greed, as well as one’s own prejudices and assumptions. This could cause them to hesitate, prevent them from trading, cause them to trade badly, or hold their position for too long.

Even though traders have a solid strategy in place, it can be difficult for them to think critically and objectively in the heat of the moment. An automated system eliminates the risk that human emotions can lead to trading.

In general, trading involves making decisions about trading assets with the aim of making a profit. All technical analyzes are based on statistical data, past market behavior and reactions.

Note, however, that CFDs are complex instruments, i the risk of losing money quickly is high because of the leverage. Therefore, everyone must first assess their understanding of how they work and determine if it’s worth it.

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