On Tuesday 12 November, 2024, Alpari, an award-winning broker, released a comprehensive report outlining the impact of artificial intelligence (AI) on the world of trading. The report shed light on the advancements in technology since the emergence of computer-assisted trading in the 1970s.
The report highlighted four main categories of AI tools that traders can currently utilize. These include language processing tools like Crowd Insight, offered by Trading Central, which can analyze market sentiment based on news outlets’ publications. Additionally, Alpari’s MetaTrader Expert Advisors, developed by independent experts, use AI to analyze and execute trades on behalf of traders. High-frequency trading, a method used by large hedge fund companies, has also been made possible through AI technology. Finally, AI allows traders to simulate potential trades and test them thoroughly before committing, making it a valuable tool for both beginners and experienced traders.
Alpari also provided a timeline of the evolution of computer-assisted trading since the founding of Nasdaq, the first electronic stock exchange, in 1971. The popularity of program trading, which uses computer systems to execute large orders, surged in the 1980s. However, the 1987 Black Monday stock market crash, which was partly attributed to program trading, sparked debate about its true impact. The 1990s saw significant technological advancements, including the launch of REDI, one of the first electronic order systems. The Securities and Exchange Commission (SEC) also allowed Electronic Communication Networks to compete with traditional stock exchanges. The 2000s saw decimalization of stock prices, making it easier for algorithms to trade in smaller quantities. The SEC’s introduction of the Regulation National Market System in 2005 also encouraged faster trading. By 2007, algorithmic trading accounted for over 30% of equity trading volume in the US. However, there were also instances of algorithmic trading errors, such as the Flash Crash of 2010, which caused the Dow Jones Industrial Average to plunge nearly 1,000 points, and the 2012 Knight Capital Group’s loss of $440 million.
The popularity and awareness of high-frequency trading continued to rise, with the release of Michael Lewis’s book “Flash Boys” in 2014. In 2016, about 80% of FX trading was algorithmic, and by 2019, 60-73% of trading in the US was algorithmic. One notable development in 2024 is the emergence of chatbots in the trading space, with companies claiming to provide informed recommendations to traders.
Alexey Efimov, Market Analyst at Alpari, commented on the potential implications of AI for traders at all levels. He emphasized the need for thorough research and understanding of the risks involved in trading, with or without AI assistance.
In conclusion, Alpari’s report highlighted the significant impact of AI on the world of trading and the potential for further advancements in the future. However, the company also reminded traders of the inherent risks involved in trading and encouraged caution and thorough research before utilizing AI tools.
-Ends-
Notes to Editors
Disclaimer: Trading is risky.
The full report is available online: http://alpari.com/en/market-analysis/ai-changing-trading/
About Alpari
Alpari, a leader in online financial trading, has been at the forefront of retail forex trading for 25 years. Their focus remains on enabling individuals to access global financial markets and generate potential returns through self-directed trading.
Alpari’s clients are individuals willing to take risks in order to generate returns and are committed to building the necessary skills for success in trading. The company’s promise to its clients is to provide secure access to global trading opportunities. In regions where local political environments do not support domestic regulation, Alpari offers offshore solutions with the same service standards and client protections as a regulated business.
Press Release distributed by https://pressat.co.uk/
