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How has AI transformed Forex trading?

Photo by Austin Distel on Unsplash

Note: This is a guest post written by Jamee Andrews

Artificial intelligence is an integral part of our reality today. This ultra-sophisticated technology has swept through and transformed every industry in the world. Inevitably, robotics and machine learning have also had a huge impact on the forex market.

Today, the forex market is worth $1.93 quadrillion. According to recent studies, the market is worth $5.3 trillion a day! Foreign currency pairs are diverse; low fees, excellent liquidity, simple entry, and no central regulator make traders want to join. But there are also risks associated with the pricing mechanism of the market, and there is also a lot of volatility.

Studies suggest that nearly 90% of all currency trading is done using trading robots, powered by AI. With this technology, they can analyze real-time trading data, evaluate live performance, and trade faster. In fact, AI has revolutionized the forex market in many profound ways.

AI and predictive analytics

A predictive analytics model predicts market movements based on existing data and algorithms. Predictive analytics can analyze large volumes of data quickly and with fewer errors than when done manually. Traders may be able to focus more on developing data-driven trading strategies by using artificial intelligence technologies. Although many processes are automated, human decision-making still plays a vital role in most cases. Investors should also be familiar with the basics of forex trading to reap the benefits of artificial intelligence.

The use of predictive analytics in the currency market is perfectly demonstrated by Nikkei, a Japanese company. Using artificial intelligence, participants attempted to predict the next month’s exchange rate in a dollar-yen derby held every three months. The AI ​​program accessed various data sources, including company publications, industry trends, market movements, and commodity prices.

According to recent surveys, more than half of all forex traders are millennials. Having grown up in a technologically advanced society, they are special cases when it comes to the use of technology. A third of forex traders locate and compare brokers using their mobile phones. Given these telling results, it should come as no surprise that mobile trading platforms are prevalent in the foreign exchange (FX) industry.

Less chance of failure

According to traders, having so much data would help them trade better and make more money.

At first glance, this does not seem logical, but there is more to it than meets the eye. This is one of the most common issues marketers face when collecting data and determining which data is most relevant. One of their biggest problems is that they don’t know what to do with the information they get.

This causes them to rely on irrelevant or incorrect information, which negatively affects their trading strategy.

You can spot problems faster with real-time analysis, solve them faster, and better analyze price movements using real-time analysis. In real time, machine learning can provide better market insights and allow you to adapt your trading strategies accordingly.

A forex trading strategy would not be complete without the use of stop-loss orders. Stop-loss orders are one of the strategies used by forex traders to minimize losses while selling their securities at the highest possible price. Having this feature work well in the often volatile forex market can save you a lot of headaches in the future.

There is a future for artificial intelligence in Forex trading. Artificial intelligence is very beneficial for forex traders on many levels. Analyzing large amounts of data for you leverages current statistics and trends to make better market forecasts. By leveraging innovative technology, users of all devices can enjoy a seamless and engaging Forex and CFD experience, regardless of their device type.

According to JPMorgan, 60% of all forex trades totaling $10 million were handled by forex algorithms or robots in 2020. Total automated trading volume is expected to reach $19 billion by 2024, up from $4 billion today.

There is a strong trend towards algorithm-aligned trading techniques on US exchanges, and algorithms facilitate more than 80% of trading activity.

Using AI and machine learning technology, investors and traders around the world can streamline their trading choices, achieve their trading goals more efficiently, and minimize their exposure to various risks.

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