The Tech Giants Leading the Charge in AI Trading Robot Development
A growing number of forex traders and hedge funds are turning to automated trading robots, taking much of the emotion out of finding and executing trades that often lead to errors among traders. Using artificial intelligence (AI), some of the biggest tech giants are investing heavily in developing trading robots that can pinpoint the strongest trends in the forex markets to maximize profits and minimize the chances of costly losses.
Trading robots are largely built to operate within a certain trading range that is often very tiny. However, the 24/7 nature of automated trading bots allows them to execute trades little and often, without the need for stop losses that forex trading platforms such as IG provide as standard for retail traders. At the time of writing, forex trading bots are legal in Australia and elsewhere around the world, although the ASIC has recently blamed forex market anomalies on these bots. Last year, it was confirmed that JP Morgan’s Asset Management department was working hard on developing a ground-breaking machine-learning software model. Its crack team of traders and quantitative analysts are working to utilize AI to create a more efficient, profitable trading model than any human trader is capable of.
According to Lee Bray, head of equity trading at JP Morgan’s Asia Pacific geomarket, the plan is to build a “systematic, adaptive model able to alter actions based on mathematical patterns”. Bray added that equity trading was “transitioning” to become more “scientific and quantifiable”. JP Morgan has been testing an AI program called LOXM with training based on billions of historical transactions to enable it to trade with optimal speed and efficiency, without causing unnecessary market swings.
Elsewhere, RoFX has been working hard to develop its own forex trading robot powered by AI and neural networks. Since 2009, this team of traders and software developers have had a plan to develop an automated trading bot, testing it on the forex market with their own funds. For the last nine years, it has been showing positive dynamics and, most recently, retail traders were granted access to the software. Intriguingly, its premium-exclusive feature offers loss coverage for users, so confident are the developers in the profitability of their trading bot.
With up to 70 forex currency pairs available to trade on a daily basis, automated trading robots offer a lucrative opportunity for financial investors to make small but regular incremental gains from trading fiat currencies. It may only be a matter of time before AI-driven trading bots are also unleashed on other markets such as commodities, given the 14.3 million commodities contracts open as of 2017. With more than 60 major stock exchanges throughout the world, decentralized trading bots could also end up dominating the short-term trading landscape of stocks, particularly those with market capitalizations of more than US$1 trillion.
The graphic above shows how trading on the stock market is a truly global industry today. How would you feel about financial markets being largely dependent on bots trading financial instruments with other robots, with next to no human intervention between them? It’s a future that looks all but certain for the world of financial trading.