Artificial Intelligence is Forecasting Returns for Investors and Traders

by Elias Kazamias | @ | July 7, 2020 7:42 pm

In recent years artificial intelligence has entered our life, from smartphones unlocked with facial recognition to movies or partner suggestions. But there is a field where its impact is felt more than anywhere else: finance.

Algorithmic trading, credit scoring, portfolio optimization, are some applications where machine learning is already in use by large corporations and startups alike. With machine learning, large amounts of data are crunched by computers to identify hidden connections and improve results accuracy.

The same is coming for forecasting returns of stock exchange investments or FOREX currency pairs. Take stocks for example: instead of relying on a rule of thumb, trading strategies, technical analysis, fundamentals, these algorithms weigh historical performance with interest rates, PE, futures, country, and industry forecasts. And technical analysis and fundamentals.

And they can much more than a simple Buy/Hold/Sell: they can give a full risk assessment of the investment. It’s possible to know what to expect in terms of profit or losses, and for different time horizons. The stock is likely to fall in the short term to grow later? It’s heading south without hope? It’s surging to new heights? These algorithms will tell you.

Now, this is true for years in large institutions. They can employ teams of engineers, statisticians, computer scientists, and data analysts to develop their models. Or that can pay the hefty fees of fintech startups to do it for them. The news is that thanks to the democratization of AI, these benefits start to be available to everybody. For example, at FibonaXY anyone can check forecasts for the main market indexes and companies of the world.