Could AI Every Fully Replace Human Financial Traders?

AI was once seen as a futuristic technology that you would only see in Sci-Fi films, but huge developments have been made in recent years and it is now being used in all kinds of incredible ways and transforming life. The role of AI in the trading world is becoming increasingly prevalent in certain markets, but the question remains: could AI ever fully replace the human element in the trading markets?

The Development of AI

AI uses machine learning and is capable of gathering, analysing and interpreting enormous sets of data to reveal patterns and trends and to predict behaviour which would otherwise be very hard to do. This means that this type of technology can be used in many different industries and it has become an important part of life.

AI in the Financial Markets

AI is becoming more prevalent in the trading world because it can accurately predict changes, it is helping many people to make smarter investing decisions with less risk and it is removing human emotion from decisions which is so important to success. The stock market involves owning and selling shares while Forex trading is betting on the value of a currency and AI can be used effectively in both of these markets, but people will find that it is better suited to Forex as the stock market relies more heavily on the human element.

Human Interactions with Financial Markets

Financial traders largely interact with markets through high technical and complex software – so the question remains, what part do humans really need to play in trading? Experienced traders rely on experience, pattern recognition and interpretations of socio-cultural factors to determine their trading strategies in stock and forex markets. Beginners, on the other hand, can start to hone their trading skills with forex trading demo accounts. Although AI is playing an increasing role in trading operations for big corporations in particular, AI is likely to remain inaccessible for independent stock traders for the foreseeable.

The Stock Market

In terms of the stock market, AI is not quite as effective as there is an important human-touch that the technology cannot replicate. When it comes to the buying and selling shares, it is not all about data as a deep understanding of industries is need to inform the right decisions based on news and events happening around the world.

Human Touch vs AI

Knowledge of socio-cultural trends and human intuition are crucial when it comes to the stock market, which is why many people are still sceptical of the use of AI in this market. It is thought that it will not be as effective as it is in a data-driven market like Forex, where human emotion can have a negative impact on trading strategies.

AI has started to change the world in recent times and has played its part in developing how humans interact with the financial markets. AI can be used to make smarter, data-backed investing decisions free of human emotion which is ideal for forex trading, but in the stock market this type of technology is not as effective and it seems that the all-important human touch will always remain here.