Top 3 Artificial Intelligence Benefits for Forex Market


Artificial intelligence will be an invaluable component of the future Forex industry that enabling to improve the effectiveness of financial markets. I have conducted a research and made this top 3 Artificial Intelligence Benefits for Forex Market.

Forex trading platforms have always used the latest developments in the Internet and computer software technologies. Now, almost 99% of traders use electronic trading platforms. Indeed, many things have been altered, I believe more significant changes on our path with the fast pace development of Artificial Intelligence.

Artificial Intelligence and machine learning are going to be an essential part of the next generation of Forex trading. Since there are numerous benefits in the usage of the new technology. Among the artificial intelligence benefits for Forex Market are the reliability in regulatory compliance, reduced mistakes, improved customer service, increase efficiency via standardization. This technology should learn to overcome risks related to trades execution. As the machines will learn from every trade they perform. Also, this technology will not need any rest as it can operate 24/7. Hence, I believe that our leisure based lives is not a dream anymore for much longer.

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Artificial Intelligence Benefits for Forex Market

1. Improved market supervision 

Both Wall Street watchdogs and exchange operators view artificial intelligence as a tool for market supervision. In addition, artificial intelligence could help Wall Street watchdogs to solve and avoid such complex issues as "layering". It means orders being promptly sent to exchanges but shortly after they are annulled. This is done to move stock prices artificially. According to Tom Gira, FINRA Executive Vice President, artificial intelligence could reveal new types of frauds.

When FinTech executives were asked about their expectations in regards to the artificial intelligence, 49% of them said they are planning to integrate the technology for risk assessment. Whereas, 29% of respondents stated they expect it to be helpful in monitoring money laundering, and 26% plan on incorporating artificial intelligence for regulation and compliance.

2. Less human errors

Speaking about the replacement of forex traders by the artificial intelligence, probably it will not be the case. Most likely there still will be people trading fundamental models; machine learning and other strategies will be created by humans. Additionally, fundamental models will be probably combined with ML/AI components and the two will converge.

Yet, the benefits of the artificial intelligence are that it allows to reduce errors, enhance efficiency through standardization and customer service. Furthermore, there are already companies and individuals that have introduced automated trading strategies. These models can identify complex, non-linear relationships between factors that are difficult to determine for humans.

3. Emergence of new derivatives

Most of the global trading takes place in the derivative segment, such as futures and options. Trading those instruments gives more flexibility in comparison to the underlying securities. Hence, there can be an addition in the number of derivative products in the forthcoming years. The real estate or second order derivatives might emerge. Alternatively, there can also be derivatives expiring weekly or classification of these products based on risk. Consequently, as the artificial intelligence software evolves there will be more derivative trading products in the upcoming years.

All in all, in the long-run artificial intelligence will not only transform the financial industry but will become the industry itself.

Think we missed something? Let us know in the comments section below.

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