There are a lot of changes or challenges going around the technological industry. We can boldly say that it has changed the way of our lives and has found a valuable place in it. Technologies have made our life more efficient and comfortable and more complex at the same time. When we say complex we mean that there are a lot of innovations that we do not even know what to use for or at least, how to use. Technologies have found their place in every industry and most importantly in the financial sector. At the beginning of the 220th century, we would not imagine that we would pay for the shopping from our telephones or have accounts with digital currencies, which we cannot see in life or touch and pay for the thousands of dollars. It somehow looks like living in the future.
Due to all those changes or innovations, there are a lot of debates going around and one of the most controversial is the financial market. Software or hardware technologies have created many opportunities and the most popular idea is that you are able to get a lot of money counting only on the machine and the system is doing the job for you. This is called artificial intelligence and due to the fact that not everyone understands its meaning, they easily believe all the rumors or fascinating news about its usage. The idea which the article will review stands that artificial intelligence can do all the job on the stock market and human involvement can be minimized. But first, let’s discuss the terms and meanings.
How does the stock market work?
A stock market is a public place/venue where individual or company investors come together to buy and sell shares of another company. Today, all those exchanges are happening in the electronic marketplace. The price is dependent on the supply and demand and the buyers and sellers place orders. The most important and technical advancements are required during the exchange process.
The exchange process means that someone, either investor or trader is paying for the stock, and the process, before that involves many steps. Before actually buying stocks, people have to analyze the stock price chart and see whether the investment will be profitable or not. However, there are created special software programs, which help people in terms of executing the trade. Many of these automated softs are pretty basic and don’t have a big variety of commands but some of the best Forex trading robots are able to perform trades based on a specific entry, stop trader’s loss in case of a price drop, buy at a certain spot or area, cancel a deal, perform money management customs designed by the trader. Now, in order to use this tool, traders do not necessarily need to write their own programming language for artificial intelligence. This is when we come across artificial intelligence, once the job before that step is done, meaning analyzing the stock price and making the decision according to the trade strategy and plan.
The development of machine learning and artificial intelligence has played an important role in trading generally since they provide quick and accurate results. The outcomes and the parameters which are used by artificial intelligence lead to positive outcomes. What it actually does is storing the data in the database; it gives us results using the historical data present. it is going to predict the stock prices and those are called the variables and for that, it uses the special algorithm. However, there are many flaws sometimes with the algorithm and there is no special formula that would guarantee the accuracy of the process and earn thousands of dollars for you.
Finally, to sum up, there are a lot of rumors or myths spread around the magic results which were made by the use of artificial intelligence. It is completely true that it has changed the ways of trading a lot and an important part of the process is done by artificial intelligence and special software which the trader is using according to its trading strategy and plan. However, the myth that the algorithm does everything for you and the only thing you have to do is to sit back and relax does not correspond to the truth. The decisions on the stock market are made collectively, not just humans, but also machines, algorithms, and algorithms predicting what other algorithms are going to do next — an infinite loop of complexity. When it is said that the complex market might make the human burnout, it can make the algorithms do the same as well. When this happens, the trader has to switch off the algorithm and humans take over the process upon themselves. Thus, the main decisions and executions are made by the traders and in some cases, artificial intelligence might appear not to be capable of making it through.