How Is AI Changing Forex Trading?

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How Is AI Changing Forex Trading?

Artificial Intelligence (AI) has been on the rise for several years in Forex trading and has changed the game completely. Not only can traders follow what’s going on in their industry and use this knowledge to trade; they can now call upon the support of AI tools which can help them to conduct more informed trading. This form of technology is introducing elements of stability into a traditionally volatile market.
How is AI helping in Forex today?

Today, it’s all about predictive analytics and machine learning that can make useful long-term predictions. Tools can forecast price patterns several weeks or even months into the future; however, these aren’t infallible. The further into the future they forecast, the more potential there is for error because of the different variables. Unforeseen events can trigger changes in prices that neither the machine nor the trader may have seen coming.

It’s not just in the long term that AI is having an impact on Forex trading, though; advanced tools in the market are predicting short-term market movements with pleasing accuracy for traders.

AI has also been helping traders to keep risk to a minimum when the market is turbulent. When assets fall below a certain price, the algorithms automatically sell them. These are known as stop loss orders.

The algorithms inject further stability into the markets because they remove the emotion from decision making. Traders who monitor their screens manually may make decisions based on emotions, which can trigger a market panic and lead to volatile price movements. AI trading cuts emotion out of the picture. The algorithms act on objective data points that indicate future price movements.

It’s not just what traders see on their screen that can make them panic. Political news, fake news, fear and other external events and variables may all move them to make (potentially bad) decisions. AI offers them the chance to see how the picture could be without the influence of these outside factors.

What is the future of AI in Forex?

AI has already created huge waves in the world of Forex trading, but it’s not going to stop there. The technology has massive potential to go further still, by creating a customized trading experience. Millennials are one group of people who are especially interested in forex trading and in 2018, many brokers seized the opportunity to explore the potential of mobile technology and had their own apps built. On these apps, traders can do things such as open positions, deposit, withdraw and track potential profits, all from their phone.

Despite being on the rise and all its progress so far, AI is still relatively young in terms of advanced AI influencing the market, but it looks like predictive analytics are the way forward for AI in the field, with Forex trading firms continuing to research into its possibilities. One Japanese firm used AI software to predict the value of Dollar–Yen in a month’s time and was just 0.05 off the actual price — the software out-forecast the firm’s top analyst, whose prediction was 0.06 away from the price.

Stunning accuracy like this shows the vast potential of AI to help Forex traders and really transform the industry. Exciting times lie ahead — and, if traders can really make the most of the technology, some incredible deals.

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