How AI Is Transforming Forex Trading
This article has been sponsored by Wise Marketing
In today’s society where everything is driven by technological innovations, it’s not surprising to see artificial intelligence (AI) disrupting major industries. From healthcare to finance, AI has proven to be a game-changer and helped make strides in improving key processes for the benefit of all involved.
One market that AI has continually revolutionised is forex trading. According to an Asian Banking and Finance article, the forex market’s daily volume hit $6.1 trillion earlier this year — and clearly there’s a lot at stake for everyone who participates in this particular industry. This in turn has created a demand for AI-led solutions to help forex traders understand the disadvantages of the market and reduce the risk of failure. With that being said, let’s take a look at how AI has transformed the world of forex trading.
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Automation
With automation, many industries and individuals have now been able to streamline how they operate, increase reliability, and enhance operational efficiency. There’s a ton of advantages to automating essential processes and this can also be felt in the world of forex.
In trading, automation has ushered in algorithms that aim to make every trader’s life easier. These algorithms work by analysing the market and providing a user with reports on how to make the best trades possible according to the user’s preferences. In fact, automated trading has risen in popularity, encompassing almost 76% of all financial transaction volumes, as reported by our very own Arun Singh Dhillon.
More than just simplifying the forex market analysis process, the surge in trading automation users is also due in part to how accurate they can be. The powerful forex platforms provided by FXCM show how today’s platforms are even capable of automating this specific function, which can be adjusted based on a trader’s strategy and preferences. This means that most traders now have room to loosen their belts and mitigate the chances of emotional trading.
The market can be incredibly turbulent at times — further increasing a traders risk of failing. But with trading automation tools like stop loss orders, traders can keep their losses to a minimum when their assets fall below a certain price. AI gives peace of mind to traders who are easily spooked by volatility variables and help them trade with confidence.
Predictive Analysis
Forex traders should also learn how to use market analysis predictions to build out long-term strategies. This is where predictive analytics and machine learning comes in. Traders can use these AI-led tools to provide them with a forecast of future price patterns, helping traders map out their trading strategies.
By using past data, machine learning can help provide real-time data analytics and trading options to maximise one’s chances of success. This can be seen in a quarterly activity conducted by Japanese enterprise Nikkei where they pit readers and analysts against each other to predict the value of USD/JPY in a month’s time. In 2017, Nikkei added AI as a bonus competitor — and unsurprisingly, the AI provided the most accurate forecast, beating more than 410 human competitors.
But more than just helping long-term trades, predictive analysis also gives traders the opportunity to review live pricing in real-time, determine red flags faster, and do the appropriate action to avoid losses.
It’s pretty obvious that AI has proven it’s worth in a fast-paced and highly volatile industry like forex trading. But as we continue to discover ways to use AI, we’re sure to see more exciting AI trading solutions in the future.