Artificial Intelligence has revolutionized the field of financial services, as it is widely used in trading operations to analyze market data, obtain investment ideas, and build portfolios.
Using artificial intelligence, investors can analyze huge amounts of data such as historical price movements, market trends, and economic indicators quickly and accurately, which helps them make correct investment decisions.
The term AI trading refers to the use of AI algorithms and predictive analytics to analyze fundamental, technical, and historical market data and stocks, obtain investment ideas, build portfolios, and automatically buy and sell stocks.
AI tools use data to calculate stock price fluctuations, determine the reasons behind these fluctuations, execute sales and trades, and monitor the ever-changing market.
Types of artificial intelligence trading
1- Quantitative trading: Quantitative modeling is used to analyze the price and volume of stocks and trades, and identify the best investment opportunities.
2- Algorithmic trading: It uses algorithms that make decisions based on historical data to implement trading decisions. These algorithms apply machine learning and deep learning to analyze market trends and financial news before conducting trading operations.
Spending on training artificial intelligence in financial fields is constantly increasing, as it is expected to reach $2.3 billion in 2025, and it is expected that during the current decade it will be able to improve the revenues of financial companies and individual investors by up to 30 percent, according to a study issued. About “McKinsey”.
More than 50 percent of financial companies in the United States use artificial intelligence programs in trading operations.
The generative AI industry is expected to grow from a $40 billion market in 2022 to a $1.3 trillion market in 2032, according to Bloomberg Intelligence.
Advantages of using artificial intelligence in trading
Mohamed Saeed, a financial markets expert, said that the use of computers in trading operations has been common for a long time, as there are certain automated trading programs that can make buying and selling decisions in less than a second.
He added to the CNN Economic platform that the decisions taken by these programs, whether to buy or sell stocks, depend on the technical analysis of stock performance, noting that these automated programs contributed to changing the trading process over the last decade and increased the intensity and speed of price fluctuations in the stock markets.
The financial markets expert said, “With the recent emergence of artificial intelligence tools, it is no longer limited to making automated trading decisions, but rather artificial intelligence builds future predictions for the performance of stocks and bonds using algorithms and statistics to analyze past and present time series to deduce the expected performance of stocks in the future.”
He added that artificial intelligence does not only use technical analysis of stocks, but also uses fundamental analysis, such as searching for investors’ opinions about the stock’s performance on social media platforms, and building an investment vision based on these opinions.
Saeed stressed that the use of artificial intelligence in trading operations has many advantages, including neutralizing the human element and reducing human errors that may be affected by the emotional aspect or other aspects, in addition to the accuracy, quality and speed of decision-making, but despite these advantages, he believes that it cannot Relying entirely on artificial intelligence programs as one mechanism for making investment decisions in the world of securities trading, as these programs may make wrong decisions based on news and information that may suddenly change from positive to negative or vice versa.
Generative AI can absorb large amounts of data and base investment decisions on it, but if this AI was originally fed incorrect data by human programmers, the decisions it makes would almost certainly be incorrect based on that data.
Financial markets expert, Mohamed Saeed, stressed the importance of the final decision in the trading process falling on the shoulders of a human investment manager.
