Why the big players on Wall Street all invest in AI trading systems

  • On : January 8, 2019

Recent events such as the global financial crisis in 2007/2008 demonstrate the tremendous impact that these financial institutions can have on the entire world. If that’s not enough, there are critics predicting that another global economic collapse will develop, it’s just a matter of time. The fear of these such events happening again in the future is why all the big players on Wall Street are investing in AI trading systems to minimise the impact of future human involvement so that nothing like the GFC will be able to happen again because of human greed.

The damage of the past events

The stock market crash of 1929 is known as the worst economic event in world history. It started by many ordinary working-class citizens that aroused interest in the stock investments and purchasing margin. One of the main problems about these margins were that the investors paid only a small percentage of the value and borrowed the rest from the bank or broker with the assumption these good times would continue. This reckless overconfidence led to the ‘asset bubble’ that had to pop sooner or later. It seems that we should have learned our lesson from this dramatic event and such an economic collapse should never happen again. But the global financial crisis in 2008 illustrates another instance of the lack of knowledge as well as again overlooking serious issues. The main difference to 1929, is that it was caused more by the bankers and brokers who were in charge of the money rather than the ordinary working-class citizens which makes the damage even worse.

Is an AI trading system the answer?

By utilising trading systems based on artificial intelligence traders hope to gain more transparency from the stock market. It provides them with the ability to crunch millions upon millions of data in real time, more than any current statistical model is doing manually.  These trading systems, also allow traders to harness historical data and analyse how markets have behaved to make predicted models for market rises or falls. On the basis of these results, investors gain the ability to make a better decision when buying and selling stocks.

AI trading systems are surely an advantage that every trader and investor has to take in consideration. It helps to see trading patterns, to track markets and to make the stock market more transparent. AI trading systems might be able to predict the next financial crisis and have the ability to prevent another economic collapse by reducing human involvement.