How traders can compete with computers (AI)? Can we?

Trading Discussion
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Good day Traders.

Future is now. is a perfect sentence for todays topic that I want to express and discus with you.

As you may already know one of my key research interest is future of trading. And when you’re thinking about it the first topic that came to my mind is AI. Nowdays we are witnesing the beggining of AI revolution in trading. And, in my opinion, it will change trading as we know drasticly in the next few years.

How do you think, is it gonna be the end of individual trading? Can traders compete with computers? Please, leave your comment.

The question how much traders (outside of the large funds) will be able to compete with a computer that has the decision-making process of the best traders encoded and it can trade in hundreds of markets simultaneously, I leave open. I don’t think it’s that hard to answer.

We are maybe 15-20 years away from that point. That’s the deadline for creating a complete SUPER AI solution for trading. I believe that as soon as in the next 6-8 years its main components will be created, working in the most profitable, liquid markets.

In this short period of time (maybe it’s gonna happen even sooner) the strongest AI solutions will have a chance to dominate the market and will be limited only by state regulations (if such will be created at all, because it is not certain).

In a nutshell, in a maximum of 15 years AI will dominate the markets and the entire investment market will be divided between two, maximum three large solutions.

Have you ever thouth about this? I have noticed that especially beginners plan to learn trading for the next 3-5 years. And only after they hope for stable income. But what you plan today, with a lot of certainty, may be outdated in the next 3 years. Are you already preparing for these changes?

Plase, share your thoughts. Cheers from not so rainy London! :slight_smile:

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I will never own a super-computer nor be able to use AI in my trading as a private retail forex trader. But then, neither will any of the other private retail forex traders who who are clients of the same broker as I am. As long as those guys don’t have AI, I am able to compete on a level playing field because I am competing with them , not the multinational financial institutions. My profitability depends on me making better trade decisions than other private retail forex traders. Which I am fairly confident will continue to be the case.

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AI will play a larger roll for big institutions and it already plays a huge roll.

Not sure it really makes a difference. You don’t need to bet against AI, you just need to make decisions that coincide with it. Fundamentals will still work the same, technical analysis will evolve but there will still be trends.

Doesn’t matter whether you’re trading CFDs or putting money into the real market, fundamentals drive the value and that’s what you should be aware of

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Will price no longer move up and down when skynet takes over? I don’t understand the concern at all really.

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I think, that assumption of “competing” and “dominating” is just wrong.
We have large bags of money, which move the market - institutions and governments.
We have small bags of money, who either lose money or bite chunks of moves produced by large bags.

At it’s core, forex is about measuring strength between economies (with some short term ripples). Large bags (also called Smart Money) do not necessarily want to WIN at forex. They do not hunt for pips - large institutions need forex positions to GET the currency they want at price they want. So we play different games. If bank wants to hedge position in derivatives or stocks or whatever other securities portfolio - it has to buy given currency at very precise average price. Any deviation in hedging is accuracy error and may result in paying claims to their clients :slight_smile: AI used by large bags do things to get position they want NOT to maximize profit. No matter what AI will be used by large bags - currencies must move.

I would not look for any disturbance by AI itself. But there may be scenarios where markets won’t move like they do now. I do not dare to predict what impact on future markets can cryptocurrencies or even political tensions have. Still I believe, that AI alone is not a threat as significant as potential change of the whole market / global approach to money.

We see impact of new technologies on the market alreadt. If we look at M1 charts, they look like higher timeframes, 10 years ago M1 charts were visual garbage, as trading frequency was much lower. We also have fifth decimal place in price, as with raising efficiency market participants needed more precision for prices. But as long as economies are free to some extent and we have currencies - these will create mid-long term movements on pairs. Retail traders can profit as long as markets move (at least at higher timeframes) :slight_smile:

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That’s not how it works.

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Please elaborate on how it works then :slight_smile:

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You bet against a broker. If you lose, they keep your money, if you win they pay you. Just like a bookmaker. Your money goes nowhere near a real market so the big banks don’t get liquidity from you at all

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And how this relates to institutional forex participants?
What I wrote, is that institutions do not hunt for pips, but aim to have positions with price hey need. In other words - get currency they want at price they want. And as per my best knowledge - it is how it works. By institutions, I mean mostly investment funds of all sort (with their custodians) not retail brokers at all.

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This reads like they’re using retail traders as liquidity, which is just as much of a misconception as pip hunting.

If that’s not what you meant, then I apologise. Although I have zero idea what it means

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