London – It is enough to know that what is traded in the financial markets is more than $ 6 trillion daily, given the magnitude of the temptation this number holds for companies operating in the smart technology sector, and the magnitude of the efforts made to an automated smart system that serves as a password that opens the caves of the financial markets and reduces the risks to which speculators are exposed.
And speculation is to buy stocks, bonds, primary commodities, precious metals and food, in the hope that their price will rise at a later date to sell it and make a quick profit. Or, on the contrary, selling a commodity you do not own in the hope that its price will fall and buy it again. Speculation is commonly described as risky transactions aimed at taking advantage of short-term fluctuations.
What some see as a key to making an easy profit, others see it as a nightmare that can eliminate speculative activity in the financial markets that can only continue with the presence of at least the number of losers equal to the number of winners .
In fact, the financial markets could not exist without the presence of three factors: First, the existence of the commodity. The second is the presence of a seller and a buyer. The third factor is the presence of one or more losers for each winner. Speculators and experts in the financial markets have always talked about the impossibility of having a 100% winning formula or method.
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The search for the goose that lays golden eggs is not a product of the technological era, we rather find the beginning of this research with “Japanese candles”, a technique still used today, and as one of the most famous methods are considered. of technical analysis of shares or the currency exchange, and it dates back to the seventeenth century, when the Japanese were trading in the rice market, and a speculator named Homa Munhisa devised a technical technique to price rice and it propose and analyze. technique was called Japanese candles.
Japanese candlesticks are a unique technique for reading price response and getting to know the psychology of speculators through a set of patterns that give early signals of great value to analysts.
Numerous efforts have since been made to search for an indicator that predicts market movement, and hundreds of curricula and books have claimed the ability to train speculators for easy profit. None of them believed. The profit and loss ratio did not exceed fifty percent, so the law of possibility and chance remained the master of the situation, and the profit remained the share of those who obeyed the law of chance, or those who made prior information about decisions. has. which can be taken and affect prices, either down or up.
However, the news in the financial world is not news after it has been published. For the simple reason that big buying and selling decisions are made based on rumors. Hundreds of indicators are not useful here as they do not provide useful information to read the future movement of the markets but rather their role is limited to presenting data and information about what has happened in the past.
There is a fundamental difference between speculation in the money markets, which is seen as a kind of gambling, and long-term investment based on thoughtful expectations.
Speculators do not pay much attention to the fundamental value of securities, but rather keep pace with the rapid movements of their daily prices, and they can in principle trade in any trading commodity or financial instrument.
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What experts agree on is that betting on artificial intelligence to predict the movement of stocks and financial markets will no longer provide opportunities to achieve higher profit rates and avoid loss, but it can provide an excellent service if accepted to make decisions automatically because it frees the speculator from psychological pressure and hesitation in Making a buying and selling decision. Experts say that reluctance to make a decision is usually the worst trait of a speculator.
Everyone who has ever tried to trade in the financial markets has heard the advice given to newcomers: the first condition to make a profit is to put emotions aside, in those markets it must be treated like a machine, without emotions. And who is better at doing this than robots?
The robot can execute any simple plan an infinite number of times without falling victim to feelings of fear of loss, or greed for greater gain.
At best, automation will only achieve results close to profit and loss. No matter who ultimately throws the coin in the air, it will establish itself either as a “tour” or a “pattern”; After several repeated attempts we will reach a point where the number is equal between the two possibilities.
This explains why governments do not tax profits from speculation, because even if the speculator makes a profit at some point, he will soon return to the loss. Just like in gambling houses.
The second option for speculators to make a decision to buy and sell is to analyze the news, not only economic and financial, but also political, environmental and scientific news. For example, announcing that a pharmaceutical company has succeeded in developing a remedy to treat a chronic illness would cause the company’s share price to rise dramatically. Those who heard the news in the process of rumors will make the biggest profit.
In situations like these, there is not much AI to offer. Wars, epidemics and natural phenomena are all factors that can be benefited by knowing in advance. The factors that control the markets are too many to count. Rumors are the master of the situation.
Algorithms, deep learning and artificial intelligence are techniques based on data and information that have happened in the past, we do not need artificial intelligence to know that the Russian invasion of Ukraine will cause a crisis that will cause food prices to rise. Or that the invasion will cause an energy crisis that will cause oil and gas prices to rise.
The variables that affect the price of stocks and currencies are more than countable, some of which can be known or predicted, but many of them are controlled by chance and randomness.
It is possible, if we analyze the economic data well, to predict, for example, that the interest rate will increase or decrease, and thus predict a decrease or increase in the value of the dollar. But is it possible, for example, to predict the magnitude of the losses caused by a hurricane before it occurs, or, as in the case of the Corona virus, the magnitude of the losses due to the pandemic before it occurs? ?
Fortunately for the financial markets, in many cases artificial intelligence will not be a crucial element, and for the foreseeable future these markets will remain an activity limited to humans, facilitated by modern technologies, but they will not replace them.