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How the implementation of trading systems with artificial intelligence will affect investment management



Automation of processes and machine learning are becoming more and more popular every day. Innovations have also reached the sphere of investment management; automated trading systems with artificial intelligence have appeared in it. This was reported by the editors of the publication MarketMogul, and we have prepared an adapted version of the article.

Market volatility and unpredictability


With increasing levels of volatility, changes in the stock market are becoming increasingly difficult to predict. In July 2017, the CBOE volatility index fell to a record 9.5 points. At the beginning of 2018, it reached 37 points, and now it is holding at 19, while the prices of shares constantly fluctuate.
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Some analysts explain the situation with a simple market correction , others see in this the growing influence of the cryptocurrency market on ordinary exchanges. Be that as it may, with the current level of volatility it is almost impossible to think out your actions in the market one step further. But technology can help traders achieve profit even in such an unstable situation.

Artificial Intelligence Robotics Editors


Robo-advisors are becoming more and more popular both among fund managers and private investors. The main advantage of such robotic financial advisers is the ability to machine learning. In part, their popularity is due to high frequency trading. Heads of hedge funds in collaboration with programmers create trading robots that can carry out transactions without the participation of traders.

For example, the company JPMorgan Chase & Co in 2017 launched a testing system for trade automation based on artificial intelligence. She was named LOXM and works in Europe, Asia and the USA. The main task of the system is to complete transactions at maximum speed and at the best price. Systems manage to do this because they are trained on billions of test deals. In addition, trade automation allows you to make deals with large volumes of financial instruments not at once, but gradually and not cause sharp price fluctuations.

Such trading systems help traders to more accurately predict transactions and not make emotional decisions. However, the development of these technologies is quite complicated and companies that want to automate trade will have to contact software developers.

For this reason, private investors and independent financial advisors, such as IFA London, cannot compete with large companies that have Robo-advisors. Also, the high cost and complexity of development slows the spread of trading systems based on artificial intelligence.

Another problem of the spread of robot advisors and trading systems based on artificial intelligence is low-quality products on the market. Some companies would not mind to automate trade, but are afraid to get on a system that does not meet the standards.

The future of AI systems


Nevertheless, the technology lives and develops successfully. For example, Babak Hodjat, one of the developers of the Siri voice assistant, intends to conquer Wall Street with the help of completely automated hedge funds. At one of his speeches, he said that for more than ten years he had been developing his own system based on artificial intelligence, which can process billions of data and predict trends.

Companies that have automated trading systems set the vector for the development of the entire market. Sooner or later, every investor will work with technologies based on artificial intelligence. In order to accelerate the introduction of such technologies into the market, small companies are likely to pool their resources to compete with major players.

According to statistics , at the moment, quantum funds are among the most successful in the market. It remains quite a bit before the introduction of trading systems based on artificial intelligence, and then it will be even easier for investors to make profits from high-frequency trading.

Analysts look at the prospects for the use of AI-technologies in the field of finance:

I believe that more and more funds, and even large private investors, will use AI-based strategies. Such strategies continue to show their effectiveness even now, when market competition is becoming very strong. And it forces programmers to continuously work on improving the algorithms. For example, news parsing and automated decision-making based on them seemed like some kind of transcendental technology 10 years ago. Now this is a fairly common practice.

- German Grigoryan , Head of DMA ITI Capital

Other materials on finance and stock market from ITI Capital :


Source: https://habr.com/ru/post/350092/

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