How to use AI to make trading?

A trader has many tools at his disposal that help increase work efficiency. Including broker-neutral trading software and AI tools for trading are available to market participants. Can this way of closing deals really provide stable earnings? AI trading has proven itself in the stock market and binary options. In the publication, we will talk about such software and the features of its use.

Artificial intelligence in stock trading

The first, most well-known, and most practical way to use AI is to create trading bots. Actually, this is the most popular method of introducing new technologies for making money in the Forex market.

A bot, or as they are often called, a trading bot, is algorithmic software that automates Forex transactions based on predetermined logic. Such bots are programmed to buy and sell currency on specific signals that are triggered by price dynamics, indicators, or any other factors chosen by the trader.

Such bots are integrated through APIs (application programming interfaces) to trading terminals, receive information from them, and can actually conduct trade independently. In a simplified form, it can look like this: if the asset goes up in price, it should be bought, and as soon as the trend changes, it should be sold immediately. In reality, such bots are usually more complex and take into account more factors, including technical analysis of chart movements, and even political or economic news.

Abilities of AI-based software in trading

Artificial intelligence can behave on its own without human assistance, unlike bots that require regular reconfiguration. He is able to develop, test, and improve trading techniques. can use new information to improve by considering market trends. In other words, AI can mimic analysts' thought processes.

Here are a few more capabilities of the broker-neutral AI-based trading software that are used for the benefit of traders, brokers, funds, and their clients:

• collecting information from news, social networks, thematic sites for its application in fundamental analysis;
• processing of market data, stock indices for their use in technical analysis;
• consulting on medium-term investments;
• asset portfolio management, its diversification;
• compiling a rating of analysts, checking their performance when choosing the best strategies for mirror trading;
• construction of behavioral models during periods of market shocks;
• detection of cases of collusion and manipulation in the market.

What AI cannot do—which is still a benefit rather than a drawback—is not recognize human emotions like fear and greed or make illogical conclusions. In the stock market, artificial intelligence outperforms both people and algorithmic machines, according to experts from InfoReach.

What is a trading bot?

An automated computer program that trades digital assets with the help of a trader or its own algorithm is known as a trading bot. In essence, all bots employ a range of signals, trader settings, patterns, and algorithms. Each bot requires a different set of triggers in one form or another to operate. A bitcoin bot may greatly minimize the amount of time required to monitor markets and filtering signals, which is beneficial for most traders, particularly intraday traders.

The main types of bots for cryptocurrency trading:

• Trend-following bots;
• Arbitration works;
• Asset lending bots;
• Bots are market makers.

The "intelligence" of these bots is rather poor. Actually, they function precisely how the user instructs. These reflect both their advantages and disadvantages. On the one hand, it can trade without oversight, close transactions faster, and eliminate people's constant uncertainty.

However, bots miss aspects that aren't explicitly mentioned in the market and can't adjust to shifting market conditions. So InfoReach team warns about consequences that might result in losses. You also need to know how to trade in order to properly configure the signals that the bot will react to. Making this decision at random will not be feasible.

Data analysis systems

Algorithmic software is not the only new technology entering the Forex market. Broker-neutral trading programs are being actively employed to develop systems that can mimic human behavior and mental processes. When it comes to Forex trading, artificial intelligence can analyze market data, provide well-informed recommendations, and eventually trade independently.

Technically speaking, there are typically three choices for developing data analysis tools for Forex trading:

• One AI technique that enables algorithms to learn from data is machine learning (ML). These algorithms may be used to forecast pricing, spot emerging patterns, and more.
• One kind of machine learning algorithm that simulates the functioning of the human brain is called a neural network (NN). They may be applied to more complicated jobs, such price prediction using vast volumes of data.
• Neural networks are used in deep learning (DL), a branch of machine learning (ML), to train on vast volumes of data. High price forecasting accuracy is the aim of developing such systems.

In short, a vast amount of historical data is "fed" into artificial intelligence. In other words, what was the market position at the time and what were the repercussions? Consider how the dollar's value in relation to the euro altered following the Fed's earlier decisions to raise the key rate. AI simultaneously gets data on hundreds of other variables, like the state of the economy, inflation, and geopolitics.

More recent models consider traders' psychology and their responses to certain circumstances. Even social network emotions are examined both before and after certain occurrences.

Systems learn to forecast future market movements based on this data. Simultaneously, contemporary systems can adjust to the client's approach and beliefs in addition to trading on the market autonomously. They may be more aggressive or cautious, for instance.