Can Artificial Intelligence Replace Traders

Can Artificial Intelligence Replace Traders

AI machine learning models are a hot topic right now. OpenAI was introduced to the world by Elon Musk on November 30, 2022. Since the introduction of ChatGPT AI, it has become the most popular source of requests worldwide. It took only five days for the number of people using ChatGPT to exceed 1 million users. For example, it took Twitter about two years to reach 1 million users. But it should be noted that "knowledge" of ChatGPT is based on information that was available to it at the time of learning. So far, it is not dynamically updated, so its conclusions do not always reflect the most up-to-date information. In fact, the data affecting ChatGPT only goes until 2021. It is for this reason that the AI can sometimes generate information that is not up-to-date or answer some questions with inaccuracies.

Some experts say ChatGPT will threaten some jobs, especially for white-collar workers, investors, and traders. An Oxford University study back in 2013 found that 47% of US jobs could be cut over the next 20 years because of AI. Certainly, some professions (such as IT staff, paralegals, teachers, marketers, accountants, helpdesk specialists, designers, etc.) could indeed be at risk. And it's already happening now. In January, Alphabet announced 12,000 job cuts worldwide, with CEO Sundar Pichai citing artificial intelligence as a key area of investment. Similarly, Microsoft announced its $10 billion investment in OpenAI just days after saying it would lay off 10,000 employees.

But it's worth realizing that AIs don't have the same capacity for creativity as humans. Of course, professions like financial advisors and analysts, where the amount of numerical data is an important part of the job, could suffer with the arrival of AI like ChatGPT in terms of having some of their work automated. For example, in investment banking, people are hired after they graduate from college, and they spend another two or three years working on learning how to model financial models in Excel. In this case, AI will do it much faster and probably better. But as for professions where creativity is needed, AI can never replace such people.

The profession of a trader is a creative one, and it is also related to predicting the future. Algorithms designed solely to predict future market movements have a serious drawback: they do not know how to do this. They respect only the technical or fundamental aspects of an asset, taking into account past price movements and avoiding any consideration of future fundamentals. Financial markets are very complex systems. It is collective decision-making not only by humans but also by machines, algorithms, and algorithms predicting what other algorithms are - it's an endless cycle of complexity.

Here is an example of AI responses to the ability to predict the future:

AI Merlin's response:

AI Merlin's response

Ask AI response:

Ask AI response

ChatGPT response:

ChatGPT response

AIs are not only not able to predict the event of a "black swan," but they are actually more likely to cause it, as traders learned bitterly from their own experience during the sudden crash of 2010 when an algorithmic computer failure caused a temporary market crash. Ultimately, AI is doomed to fail at predicting the stock market. On the other hand, AI can bring enormous financial benefits to traders and investors because it allows them to quickly and efficiently find the right information, conduct market research on the right factors and optimize the process of testing strategies. Therefore, it is best to consider AI as a partner, a collaboration that will help traders and investors be even more successful.

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