Updated December 17th, 2023 at 21:04 IST
3 ways AI transforms financial strategies
The widespread use of AI in finance and investing stems from its ability to process and analyse vast datasets.
Artificial intelligence (AI) involves machines mimicking human intelligence through specialised software designed to imitate human processes. While AI encompasses advanced applications like OpenAI's ChatGPT for user conversations and autonomous driving, it spans many uses. In the realm of the financial market AI algorithms play a crucial role, representing programmed instructions and generating outcomes from analysed data. AI in investing and finance manifests in various forms, including straightforward applications. Hedge funds and trading operations leverage AI extensively, gaining slight advantages in fast-paced markets.
The widespread use of AI in finance and investing stems from its ability to process and analyse vast datasets. It aids in selecting stocks, predicting market movements, optimising portfolios, managing risk, offering personalised investment advice, and automatically constructing customised portfolios aligned with specific investor criteria. This discussion will explore diverse ways investors can integrate AI into their strategies, enhancing decision-making.
AI and machine learning simplify the intricate work of stock market analysis by managing complexity and breadth. Additionally, they assist in gathering objective data, analysing stocks, and identifying patterns.
In trading and trade management, the ability to trade instantly and robust computing power has led brokerage companies to provide customers with advanced order entry tools. These tools enable computers to monitor and manage trade entry and exit strategies efficiently. For instance, the diligent use of AI in trading can significantly reduce the emotional aspects of trading.
Specific platforms offering AI-driven tools for trading include:
1. MT5 (MetaTrader 5): MT5 provides third-party trading software connecting to numerous online brokers. Its MQL5 marketplace lists a plethora of AI-backed robots capable of 24/7 trading across various markets. Users can purchase and upload these robots into the MT5 software.
2. Capitalise.ai: Capitalise.ai allows users to harness AI for automated trading without requiring coding knowledge. Users provide text prompts to instruct the AI bot, specifying actions such as purchasing a specific amount of stock based on set conditions. Capitalise.ai also offers features like backtesting and simulated trading.
3. Magnifi: Magnifi is a novel AI trading tool aiding consumers in making informed investment decisions. It builds portfolios, suggests strategies aligned with investment goals, and helps manage risk exposure. Magnifi, available as an app for iOS and Android, connects to various online brokers, including Robinhood, E*TRADE, and TD Ameritrade.
Published December 14th, 2023 at 10:03 IST