September 17, 2019

How Much Artificial Intelligence Has Changed the Forex Trade

How much Artificial Intelligence has Changed the Forex Trade

The use of Artificial Intelligence is limitless.

It has already impacted almost any segment of our lives. It helps us get feedback from brands in real-time; it minimizes the risk of human error and automates most of our daily activities; it improves the photos we take on our smartphones; it assesses our creditworthiness, and so forth. One of the markets that benefit from artificial intelligence and Machine Learning most is forex trading. Namely, forex is the ever-growing industry that is worth $1.93 quadrillion. Recent studies say that $5.3 trillion is traded in this market daily. Low costs, high liquidity, ease of entry, a variety of pairs to trade, and no central regulator make it highly attractive for traders.
Still, to get the most out of your forex investments, you need to understand the disadvantages of the market, as well. Complex price determination processes, high volatility, and high risks are just some of them.

To minimize the risk of failure, traders rely on AI. Stats emphasize that 90% of successful forex traders today use robots to make money. These innovative technologies allow them to analyze massive amounts of data effortlessly, track their performance in real-time, streamline trading processes and, therefore, make wiser trading decisions in the future.

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Let’s see how Artificial Intelligence is revolutionizing forex trades.

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The Advantages of Predictive Analytics

One of the major benefits of implementing AI into forex is Machine Learning and predictive analytics.

Predictive analytics uses existing trade data and algorithms to predict market fluctuations. The capabilities of predictive analytics extend the ones of human beings, as it can analyze massive amounts of data faster and makes fewer mistakes. By letting the AI software do forecasts for them, traders can focus more on creating wiser, data-backed trading strategies.

Nikkei, a Japanese enterprise, is a perfect example of how beneficial predictive analytics can be in the forex industry. Namely, they organized a quarterly Dollar-Yen derby, where they used Artificial Intelligence to predict exchange rates for the next month. The AI software used a wide array of data from multiple resources, such as the organization’s articles, industry trends, market fluctuations, commodity prices, and so forth.

To assess the effectiveness of predictive analysis, they compared its results against their top analysts’ predictions. The results were impressive – the AI software served up a far more accurate forecast (it was only 0.05 away from the exact value).

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Providing User-Centric Trading Experiences

Just like in any other industry, in forex, user experience is critical.

Namely, the demands of a modern forex trader are higher. And, the reason for that is simple.

How much Artificial Intelligence has Changed the Forex Trade

According to some recent research studies, almost half of forex traders are millennials. And, as you already know, they were raised in a tech-driven world and, as such, they stand out in the technology use. They use multiple devices and platforms to do their research, collect data, and develop their trading strategy. The same stats emphasize that 35% of forex traders are using their smartphones to discover and compare FX brokers. Unsurprisingly, mobile trading is expected to grow from 18% to 37% in the next few years.

Given these astonishing facts, it’s not surprising at all that the number of FX brokers jumping on the mobile trading wagon is growing. Forex brokers need to invest more in mobile marketing in order to put themselves in front of the right audiences.

Above all, they need to provide tech-savvy traders with user-centric experiences, such as multi-channel onboarding, a responsive mobile app, and simpler deposit and withdrawal processes. This can be best seen in the example of Ever Forex that started transforming mobile trading experiences. Namely, they developed a trading platform, MetaTrader5, which offers sleek execution abilities, irrespective of a user’s device.

The Right Information Reduces the Risk of Failure

Many forex traders often say: “If I had such vast amounts of data beforehand, I would make better trading decisions and make more money.”

Unfortunately, this is not that simple.

One of the main problems traders face is not knowing how to collect their data, as well as not understanding which kind of data is relevant to them. Most importantly, they are not sure how to use the data they collect strategically.

Consequently, they start relying on irrelevant and wrong pieces of information, which may hurt the overall effectiveness of their trading strategy.

This is where real-time data analytics and automated trading options can help. It gives you the opportunity to analyze live pricing in real-time, spot problems faster, and fix them almost instantly. Machine Learning can use large amounts of historic information when analyzing trading data in real-time, providing you with better insights into the market and helping you shape your trading strategy according to the current market’s volatility.

Let’s take the example of automated stop-loss orders that have become an inevitable aspect in the forex trading sphere. Namely, a forex trader sets their stop-loss order with their FX and CFD broker to ensure that their loss is minimized and that they sell their security when it reaches the highest price. In a highly volatile forex market, this feature can be extremely helpful, when used wisely.

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AI is the Future of Forex Trading

Artificial Intelligence benefits forex traders on so many levels.

It analyzes massive amounts of data for you and uses current stats and trends to provide better market forecasts.

It encourages FX and CFD brokers to adopt new technologies to provide smooth and immersive user experiences across different devices.

Most importantly, it automates key parts of the trading process and lets you track your performance in real-time, helping you identify core problems and fix them instantly.

Is there anything you would like to add? Please let us know in the comments section!

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