One of the greatest contributions that modern society has provided to the world is the development of AI or Artificial Intelligence, which is programmable automated responses that aim to mimic the human brain. With the ongoing improvements of automated data processing and various complicated machineries, many believe that AI will change the course of Forex trading for the better in the years to come.
With so many possibilities just waiting to be untapped, here are some of the developments that are being undertaken in relation to intelligent machines and foreign exchange trading:
1. Working on how intelligent machines can help save foreign exchange trade resources
Artificial intelligence is developed in order to help ease the lives of people, and one of the primary uses is helping in saving resources like time, money, energy and others. When it comes to starting a career in trading foreign currencies, many budding traders have to make sufficient investments in order to ensure their success. This includes securing items such as:
- A reliable exchange platform
- A trustworthy Forex broker such as Engine Forex
- A starting capital
- Various tools that can ensure their successful trade
Trade requires time and energy to succeed. Current artificial intelligence efforts aim to save a lot of money by simplifying the trading process for traders. This would of course, affect a Forex broker’s livelihood since they are usually the ones who carry out orders from their traders; but it would open the market to more new traders.
2. Enabling competition within various brokers
Competition creates opportunities and this rule applies not only to traders and investors but also to brokers as well. Considering that there are various Forex trading platforms and brokers looking to make their reputation well-known, one can expect that many of them are more than willing to invest in AI programs that help in giving a competitive edge.
While many brokers claim to have included artificial intelligence into their platforms, experts recommend in taking these claims with a grain of salt since many are ready to make false claims. To determine whether or not a company is making false claims, here are some signs to watch out for:
- They are backed by unknown investors
- The key employees do not have any technical leadership background
- Most of the key employees’ past work experiences are suspicious
- The company hires fresh graduates or novice employees instead of tech experts
- The company has a history of being untrustworthy
Some of these data can be checked via LinkedIn as well as other social networks.
3. Helping traders gain accurate forecasts on primary markets
The amazing thing about AI is that it is able to analyze, interpret, and narrow the options where traders can make a profit. This includes taking into consideration of the trader’s relationship with intermarkets, or related submarkets, that play an active role in the price movements of said primary markets. So far, experts were able to train these artificial neural networks to take cues and directions accurately. Here are some forecasts that AI could use:
- Take all existing data from economic calendars and plot progressions
- Establish trade relationships from high-demand currency pairs
- Collate news articles and establish how they relate to trade value increases and decreases
With this process, investors will then be able to gain insight on the relationship between primary and related intermarkets, finding clues on which factors will most likely influence price movement trends later on. With this insight feature intact, traders can then create a new strategy that best fit their style, an advantage that could not be possible without the help of Artificial Intelligence.
4. Revolutionizing the learning process
No matter how new or seasoned you are as a trader, there is no doubt constant learning is an investment one simply cannot ignore. Prior to starting a Forex career, experts recommend that novice traders invest in learning the basics and advanced strategies of the market while also constantly updating themselves with the different factors that affect a currency’s value.
To do this, investors would need to invest in various educational resources. Some of which include online books, seminars, and webinars which more or less requires a ton of money. However, thanks to AI technology, users can increase their learning efficiency while saving time by including analysis features in various trading platforms.
By utilizing dynamic trading mechanisms, users can then adapt to the environment of the market during demo trading as well as trading live. This ensures that investors continue to learn as they trade without spending too much capital on strategies that are not backed by objective data.
5. It helps reduce subjective trading
One of the most exciting yet volatile aspects of trading in the Forex market is having to deal with its unpredictable nature. The latter of which usually involve price movements, external factors, and the constant feeling of needing to stay updated all the time. While exciting at times, this effect can ultimately affect the person’s psychological viewpoint, subconsciously triggering negative emotions. Some of which include fear, anxiety, worry and constantly feeling under pressure.
All of which are emotions that can affect a trader’s time and potential in learning as well as making a deal. As traders take a break to cool their emotions, these trained machines will then trigger potential entry and exit points that can earn them a lot of profit. This results in saving time and emotional distress since AI can function as a supplementary aid in making quick decisions.
6. Provide effective trading strategies
While AI has the potential to reduce emotional trading, it still needs the assistance of both tech experts and Forex experts for it to be fully optimized. This means working together to help machines identify opportunities for profit and analyzing and managing the risks efficiently.
While this possibility certainly isn’t far off, it will take a while for the machines to adopt the same flexibility as the human mind.
If this occurs successfully, then traders can learn new trading strategies that are not only backed by experts but by presenting data. This will certainly play an advantage to many educational resources and can even improve the demo account features that most Forex trading platforms offer.
7. Advanced AI Forex technology is currently undergoing various testing phases
As of 2019, Nikkei is the only company that has proven to have worked on AI-based Forex Solutions in their company. While the software has yet to be officially launched, this Japanese media enterprise has conducted various tests to check it’s software’s expertise. So far, it was able to accurately forecast Forex exchange rates during its debut in 2018.
With developments still undergoing, it’ll only take a matter of time before other companies will debut their own AI Forex solutions software as well with the earliest introduction to begin sometime around 2020.
Conclusion With these assumptions, it’s safe to say that many traders and investors can expect various changes when Artificial Intelligence becomes officially introduced to the market. However, this doesn’t mean that they should stop honing their craft since it will still take some time for these intelligent robots to become mainstream.