{"id":7537,"date":"2018-02-26T15:58:58","date_gmt":"2018-02-26T14:58:58","guid":{"rendered":"https:\/\/www.intellias.com\/?p=7537"},"modified":"2023-05-22T09:41:28","modified_gmt":"2023-05-22T07:41:28","slug":"artificial-intelligence-predicts-financial-markets","status":"publish","type":"blog","link":"https:\/\/intellias.com\/artificial-intelligence-predicts-financial-markets\/","title":{"rendered":"How Artificial Intelligence Predicts Trading Market"},"content":{"rendered":"

Proper data evaluation and use of artificial intelligence in stock market<\/span>\u00a0are critical\u00a0to\u00a0asset management. Whether it\u2019s\u00a0the\u00a0stock market, forex,\u00a0or cryptocurrency, plenty of analytical work, AI capabilities, and in-depth research\u00a0is required.\u00a0Artificial intelligence stock trading software comes to the fore today.<\/span><\/p>\n

Lewis Sanders,\u00a0CEO of\u00a0Alliance Capital Management, says that\u00a0understanding human behavior\u00a0is\u00a0also\u00a0crucial for investors.<\/p>\n

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Capital markets themselves are derivative of the biases and preferences people bring to decision-making. Everybody has the information. But are people reacting to it rationally?<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\tLewis Sanders,<\/span> CEO of Alliance Capital Management <\/span><\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

Who and what influences the market at\u00a0any given\u00a0moment? How do people feel about\u00a0a\u00a0new product from\u00a0a\u00a0company in the Dow Jones Industrial Average?\u00a0Artificial intelligence (AI)\u00a0and deep learning can help us answer these questions and predict\u00a0market\u00a0movements to earn\u00a0\u2013\u00a0or save\u00a0\u2013\u00a0millions of dollars.\u00a0\u00a0<\/span><\/p>\n

Trading firms, hedge funds, banks,\u00a0and brokers analyze volumes of\u00a0data to make investment decisions. Sifting\u00a0through\u00a0so-called\u00a0alternative data\u00a0that\u00a0<\/span><\/span>refers to data assets used to get insight into the investment\u00a0<\/span><\/span>process<\/span><\/span><\/strong>\u00a0costs\u00a0firms a lot of money and enormous effort. Alternative data itself has created a separate market where information is scraped, filtered,\u00a0and sold to trading companies. This makes optimizing\u00a0data analysis\u00a0(and as a result, financial predictions)\u00a0an essential task for the investment community and the use of AI in\u00a0finance and AI for trading a real remedy for artificial intelligence predictions of market trends.\u00a0Artificial intelligence stock trading software, obviously, will have a huge impact.<\/span>
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AI in stock trading and financial markets: key applications<\/h2>\n

\"How<\/p>\n

Traditional software is helpless\u00a0at\u00a0making financial predictions since it has predefined rules while\u00a0predicting financial markets requires\u00a0constantly\u00a0changing algorithms. Hedge funds have been using computer algorithms in trading for years,\u00a0but these algorithms were developed based on static models\u00a0that don\u2019t account for\u00a0market volatilities.\u00a0\u00a0<\/span><\/p>\n

Machine learning for trading and deep learning<\/a> have brought innovative solutions and approaches to the\u00a0financial market for implementation of AI in stock trading, FinTech, and other fields. Neural networks trained by deep learning algorithms create their own rules, connections,\u00a0and patterns while analyzing data, including the digital layer. What\u2019s more, neural networks adapt as they receive more information\u00a0and can, therefore, make better predictions in future based on insights from previously analyzed data<\/strong>. The volume of information processed with the help of deep learning\u00a0and the level of detail at which it\u2019s analyzed\u00a0would be impossible for humans to\u00a0manage but AI in stock market makes finance assets management a real case.<\/p>\n

When making decisions,\u00a0FinTech firms, funds,\u00a0and brokers use both structured historical information about markets and\u00a0a\u00a0massive layer of unstructured data from various outside\u00a0sources. Today, using AI trading software solutions in financial markets helps\u00a0to\u00a0analyze\u00a0both time series and alternative data that makes possible even the use of AI with cryptocurrency.\u00a0Some big names among hedge funds rely on AI stock trading software, including\u00a0Renaissance Technologies,\u00a0Man\u00a0<\/a>Group<\/a>,\u00a0Aidyia,\u00a0Binatix, Sentient Technologies,\u00a0and\u00a0Bridgewater Associates.\u00a0These hedge funds\u00a0use AI and machine learning for stock trading to:<\/p>\n