The union between automation and new technological advances is now present in many markets, including trading. At the heart of this new system is a new unifying component, whose objective is to optimize processes : artificial intelligence (AI). In this article, we will talk about trading robots and artificial intelligence, their similarities, but also their differences.
A trading robot, what are you talking about?
A trading robot is a programmed software that automatically performs actions on the financial markets. The robot places buy and sell orders, opens and closes positions and is also present on the financial markets day and night. It is a robot, it never feels tired. Finally, the robot replaces the trader to a certain extent. It is able to perform all its actions but would not be able to do so if a human trader had not previously conditioned and programmed it to perform all these actions. In fact, it only respects the algorithm that has been given to it while still giving the human trader more freedom. The trader thinks, and the robot executes.
What is artificial intelligence in trading ?
An Artificial Trading Intelligence will be a continuation of the trading robot and will reproduce exactly the same actions as a trading robot, with a few changes. An AI has an automatic learning capacity. It learns to analyze the market through a programmed algorithm. This allows them to think and make decisions on their own. It is this notion of decision making that finally differs. Thanks to deep learning in particular, AIs make decisions themselves without the human having dictated this choice beforehand. Finally, we can note that an AI is much more independent and closer to the human character than the trading robot.
And what are their advantages?
- Time saving for the human trader : the trader only has to let the robot act and can use his time differently.
- No psychology : the trader’s job is sometimes hard. The robot is totally devoid of feeling, emotion and fatigue. It never stops, except when a human intervenes.
- Speed and precision : it is able to accurately analyze and position itself on several stocks at once in a few seconds and several times a day.
The two additional advantages of Artificial Intelligence are that initially an AI is perfectly autonomous thanks to :
- Its Deep learning technology.
- Its access to Big Data which allows it to be connected to the live financial markets and to benefit from millions of data.
- Its mathematical models and algorithms, which allow it to model chaotic systems.
In addition, compared to any robot, an Artificial Intelligence is able to « think » for itself.
So trading robot or trading AI?
What you have to remember in all of this is that the robot requires much more intervention than a human trader, whereas the AI is much more autonomous or even totally autonomous.
Robots will automate human tasks without thinking and do not make decisions unless dictated by the human, whereas AIs have this ability to think and reflect without being dictated.
In other words, the trading AI has functions that the robot does not have, although it has similar traits. Of course, these are products that will never end, because with time and a lot of R&D, these new technologies will continue to progress.
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