AI ‘trading bots’ are software programs that use artificial intelligence (AI) to analyse market data, generate trading signals, and execute trades automatically.
‘I meant Artificial Intelligence Investing not ‘Alien’ Investing (AI)’
AI trading bots are becoming more popular among investors who want to take advantage of the speed, accuracy, and efficiency of AI technology. But is this a good thing for the future of investing?
Pros
AI ‘trading bots’ could transform the world of investing
- Enabling more accessible and affordable trading for everyone, regardless of their experience, knowledge, or capital.
- Enhancing the performance and profitability of trading strategies, by optimising entry and exit points, managing risk, and adapting to changing market conditions.
- Providing more diverse and innovative trading opportunities, by exploring new markets, assets, and strategies that human traders may overlook or ignore.
- Reducing the emotional and psychological biases that often affect human traders, such as fear, greed, overconfidence, and regret.
Cons
AI ‘trading bots’ also pose some challenges and risks
- Increasing the complexity and volatility of the markets, by creating feedback loops, amplifying trends, and triggering flash crashes.
- Exposing traders to technical glitches, security breaches, and malicious attacks, by relying on software and internet connectivity that may malfunction or be compromised.
- Raising ethical and regulatory issues, by creating potential conflicts of interest, information asymmetry, and market manipulation.
Conclusion
AI ‘trading bots’ are not a mystical ‘get rich quick solution’ that can guarantee success in the world of investing. They are tools that require careful selection, evaluation, and supervision by human input and for the human trader to maintain ultimate control.
We should always be aware of the benefits and limitations of AI technology.
