The Impacts of Artificial Intelligence in Stock Market Prediction
This is a Guest Post Submitted by Gunjan Dogra
Artificial Intelligence is revolutionizing every area of our lives. It has become very important in stock market prediction also. Artificial Intelligence is changing the way trading is done. Moreover, artificial intelligence is becoming more and more important in the stock market price prediction.
Artificial Intelligence systems have become a great tool for traders in risk management and decision making. Human decisions are influenced by emotions, so it sometimes affects the outcomes. On the other hand, artificial intelligence systems are based on algorithms and have no influence on the emotional factor. Artificial intelligence is the branch of computer science that helps in making intelligent machines. These machines have the capability of problem solving, reasoning and decision making.
Advantages of artificial intelligence algorithms in stock market prediction are:
- Artifical intelligence can find out the best possible model for algorithms by automating the process which in traditional method is a time taking and tedious process.
- Artificial Intelligence as a service has increased the number of markets one can monitor and respond.
- Artificial Intelligence applications improve over time. They can learn from the past trends in the market.
- In this way automating the processes which most competitors are performing manually, monitoring a number of markets at a time and having access to real-time data gives an edge over your competitors.
Markets are complex:
Market are complex systems that depend on a number of dependent and independent parameters. All these parameters collectively affect the market condition. Prediction of the financial market to high accuracy is not an easy task. If it was, the big brands that have invested so much in researching the market prediction, would not occur loss.
On the other hand, it is not completely random in nature. It also follows a certain pattern that we have to understand. So, it is a mixture of randomness as well as systematic component.
Artificial intelligence systems are useful in predicting the stock market results. AI Machine Learning has helped in forecasting the future trend of the market.
Now, we will discuss the impact of artificial intelligence in stock market prediction.
Speeding up the trading process:
Artificial intelligence technology has increased the speed of the stock market trading to up to 5 times than before. AI systems fulfill the two major requirements in stock market trading: speed up the stock market trading process and predicting the future behavior from past data. Artificial intelligence system can purchase and sell the stocks autonomously based on machine learning algorithm. If recent data in stock market trading is to be believed, then there is a massive increase in the average number of shares traded in the day from 346 million to 1.6 billion.
Impact on stock market functions:
Artificial intelligence has a significant impact on stock market functions. The auto trading is becoming popular among general masses. AI algorithms can predict the market up and downs thereby reducing the complexity in trading. It has also mitigated the risk factor involved in trading and maximized the profit. In the upcoming future, artificial intelligence will correctly predict human behavior along with the stock market trends.
AI-based advisor bots:
The advisor bots that are built using artificial intelligence services and are becoming popular over the past few years. They are helping the businesses by advising the strategies that can maximize the profits by minimizing the risk factor. One of the main factors in the popularity of advisor bots is the use of machine learning. Machine learning has improved significantly over the past few years. It is having a huge impact on the financial markets too. Hedge fund managers along with AI developers are designing Advisor bots that can trade autonomously.
Stock market involves a huge amount of data. Hackers and cybercriminals are constantly looking for the loopholes in the security systems. As stock market is a monetary based system, the security of data is of utmost importance. Artificial intelligence system is making trading more secure. Biometrics and facial recognition systems are helping in improving the authentication systems in stock market trading. Artificial intelligence applications also detect the unauthenticated access in the security system alarming the authorities concerned.
Makes Real-Time decision making simple:
There is a huge number of stocks to select from every day and to choose the best stock is a very difficult task. There are a number of factors that can impact stock market like new products, economic instability, entry of new competition etc. These factors can impact the stock market. AI applications can predict the stock market by using the history data. It also enables in taking the real-time decision. For example, the news of scam in a bank is easily picked up by the bank. In this way, AI can automatically sell the shares of the bank before spreading the news in the mainstream media.
Artificial intelligence as a service is becoming more prominent in the stock market prediction. Artificial intelligence decisions are not based on guesses or personal logic. They are based upon the historical data. AI machine learning applications speed up the decision-making process. Also, the stock market data is more secure with artificial intelligence applications. Combining the human experience and the machine learning algorithms, businesses can do wonders in terms of profit making. The impact of such technology can revolutionize the stock market trading if used constructively in the upcoming future.
Gunjan Dogra is a Marketing Manager in Webtunix Solutions Private Limited. She writes articles for her passion and knowledge sharing. Her articles have been published in the number of reputed sites like EzineArticles.com, ArticleCube.com, and Sooperarticles.com. A good thing about her article is that she includes multiple perspectives on a particular topic and draws a constructive conclusion.