Artificial intelligence (AI) is now being used by traders to manage hedge funds. Let the battle of the bots commence!
A new survey by Market Makers has shown that the top 50 hedge fund traders are using AI to make decisions for them.
According to the company, nine out of ten hedge fund traders now use AI to achieve portfolio returns. They say, “As interest rates soar, even cash-rich investors are pulling back on risky human powered trading and investing in AI.”
According to Market Maker, using AI for analysing trades is taking hold at HSBC, Jane Street, Barclays, Apollo, and Bridgewater & Associates.
Matt Forbes is an AI engineer at Market Maker. He says, “AI has the potential to fundamentally change the way investing works, and could solve a lot of the problems that have caused investors to lose money in the past. AI excels at one thing humans do poorly, and that is pattern recognition.”
AI trading and time saving
Now, according to the company, there is no need for humans to spend hours researching what to trade. “AI will decide everything for you, freeing up valuable time. It could also reduce any human biases in investing.”
VP of analytics Mike Andrews says that artificial intelligence is the future. “Even Google sees AI-powered chatbots as a ‘code red’ for its search business. Microsoft’s $1 billion investment into OpenAI may be one of the shrewdest bets in tech history.”
Artificial intelligence and the human advantage
Humans still have an advantage over artificial intelligence when it comes to the stockmarket and that is when gut feeling is required. Making decisions based on intuition is something an AI will never be able to do. Even in a numbers game like the stockmarket or the cryptommarkets.
There are other things to consider. While trading on the stockmarket or in the crypto markets sounds like an analytics game, it can take creativity to do really well. Humans can and do come up with new and innovative investment strategies. Artificial intelligence systems are limited to the parameters set by their programming.
And of course, humans can understand ethical issues, and avoid anything they think isn’t worth pursuing, like investing in tobacco, for example. The bots might be programmed to not care.
It seems like a blend of both artificial intelligence and human decision-making might be the way forward here. But things change fast in the world of AI, so we may have to revisit that conclusion over the coming months.
It’s a brave new world, may the AI forever be in your favour.