I am working on my final year thesis and the topic I’ve chosen is about Artifical intelligence used in the Forex market.
My statement of the problem is - can AI replace Forex traders on the forex market in the next 10 years.
I want to either prove or disprove this statement.
I have a few questions and if you could take some time out to read and reply to them it would be a big help.
What is your name?
What are your job responsibilities? And what kind of latest technology do you use?
How long have you been working in the FOREX market?
What is the current state of the FOREX market?
What new technologies have been applied to the FOREX market over the last 20 years?
Do you use any kind of Artificial intelligence or Machine learning programs for trading?
Can you think of AI becoming an integral part of trading in the next 10 years?
If yes why and how do you think that will happen?
If not why do you think so?
My research paper is due this week and I am badly behind schedule. Can you please help me by answering these questions to the best of your ability? It might take some time, but please help.
My first impression is that this is a very strange question!
Foreign exchange is not only about trading, and even trading is divided between professional/institutional trading and retail trading. In fact, retail traders are not even directly participating in the actual foreign exchange markets. Their counterparts are their brokers who, in turn, may or may not pass some of their overall risk forward into the forex market via their liquidity providers.
This means one can divide the foreign exchange market into at least five different categories:
Companies and other bodies/individuals who are engaged in international trade who buy and sell currencies as part of their business. They are not speculating on currency movements or trading, they are only dealing in payables and receivables as part of their own operations.
Pension/investment type funds and other financial institutions who are responsible for managing funds that are under their care. These are interested in many aspects of profit in addition to currency rates such as interest rates, national fiscal/monetary policies, industrial sectors, etc.
Professional trading houses/commercial and investment banks/large companies which are trading currencies as a speculative activity either as entirely or part of their overall business activity.
The market-makers in the foreign exchange markets whose prime role is to provide liquidity to the markets by always offering funds with both a bid and offer spread. Their income source is their spread in a neutral market and a “leaning” in a trending environment
The retail speculators who, as mentioned, are only dealing with their broker as their market-maker.
I doubt that AI is going to take over all these roles but will definitely have an impact in some of the professional areas of this business.
There have been a number of studies by various institutions including central banks on the impact of algorithm trading in forex markets and they might give you some pointers for your studies?
But BP is primarily a site aimed at newcomers to retail trading and I doubt you will get much input from here for that reason.
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