AI trading, utilizing artificial intelligence tools, revolutionizes financial markets by shifting from traditional investment methods to automated strategies. Investors increasingly leverage AI for real-time stock trading via algorithms, enhancing speed and precision. The evolution of algorithmic trading, particularly in India, has seen a notable rise, with about 70% of trading volumes driven by these technologies. The global algorithmic trading market, valued at $15.5 billion in 2021, is projected to grow at a CAGR of 12.2% through 2030. Key AI techniques include sentiment analysis, predictive analytics, and machine learning, enabling enhanced decision-making and market trend analysis. While benefits like reduced research time, lower costs, and 24/7 trading support AI’s adoption, challenges exist, including data quality issues, lack of transparency, and cybersecurity risks. Successful examples like the Medallion Fund and Two Sigma Investments illustrate AI’s potential. Future trends indicate a focus on transparency, refined risk management, and regulatory compliance in AI trading.
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