AI is Shaping the Future of Currency Trading

Are you involved in currency trading and wondering whether there’s any way to get an edge? Check out our guide to AI and find out how it is used in forex.

AI is everywhere that you look and in many places that you don’t see too. It’s already part of currency trading, shaping the way traders access the market – and it’s set to play an even more influential role in the future.

Machine Learning and Predictive Analytics

AI is a wide-ranging technology that can be utilised in many ways. Machine learning and predictive analytics are two types of AI that are already being used to significant effect within forex, which is the common name for currency trading.

Predictive analytics offers better insight and knowledge, and using CFDs in new ways becomes possible. Drawing on algorithms and data, this type of AI can predict fluctuations in the market more accurately. And not only is it less prone to errors, but it’s also able to get through vast amounts of data very quickly.

A study in Japan compared the results from predictive analytics drawn from AI against their best human analysts. The AI results far outperformed their human counterparts, and furthermore, the predictions were just 0.05 away from the actual value.

By using a wide range of data from different sources, predictive analytics is already helping traders plan their strategies far more effectively.

Pinpointing the Data

Traders often blame a lack of data for a failure to succeed, but in reality, it’s more complex than that. Presented with a vast swathe of information, it’s often difficult for traders to ascertain the most significant factors. Having enough data is one challenge, but drawing on it strategically when needed is something else.

Luckily, this is where machine learning excels. Using real-time information and automated trading, AI can help traders to eliminate mistakes and respond to changing market conditions almost instantly.

Using historic data to analyse real-time information, machine learning can help you adapt your trading strategy to meet the current volatility in the market. When combined with stop-loss orders, AI can help you to pinpoint the proper levels and maximise profits without swallowing too much risk.

The Benefits of AI

Speed of processing and accuracy are two of the biggest benefits to AI, but the objectivity it offers is invaluable too. No matter how much you try to distance emotions from strategy, it’s impossible for any human to make decisions that are entirely uninfluenced by personal bias.

Using AI allows you to flex your strategy to suit your budget and attitude to risk without any delays in responding to market movement or failing to take the right decision.

Various forms of AI have been in use within forex trading for some time and delivering all of the above benefits have transformed the market. This type of fast-paced trading is ideally suited to AI, and it’s liable to continue to become even more critical for traders moving forward.