Brokers, Traders, and Generative AI: How to Improve Workflows and Decision-Making Processes.

In today’s fast paced financial markets, Artificial Intelligence brings many new opportunities and advantages that empower investors and traders, by automating buying and selling of financial instruments such as currencies, derivatives, stocks, Crypto, etc.  When it comes to analyzing data and finding patterns, human intelligence simply can’t compare to the speed, precision, pattern, and trend recognition that AI is capable of.  

In this article we will explore how generative AI can increase any brokers workflow, decision making and generate potential brokerage growth: 

3 Ways Generative AI is Improving Brokerages: 

1. Algorithms vs. Emotions: It has already been proven that what humans have mistaken in the past for random events could be recognized as a pattern when scanned by a computer.  Algorithms can scan and analyze vast amounts of data, in scales that are impossible for human minds. Additionally, noise in the market can confuse traders and misrepresent genuine underlying trends, but AI can drown out the noise, determine the profitable opportunities, and precisely execute trades without delay.  By eliminating the emotions factor, such as fear or greed, algorithms are less prone to errors that result in more accurate predictions and better decision making.   

2. Enhanced risk management: AI also identifies potential risks and make decisions about trading strategies to minimize those risks.  Algorithms can be programmed to continuously monitor market conditions and identify potential risks based on factors like price movements, volatility, news events, and trading volume.  By automatically executing stop-loss orders when certain thresholds are reached, traders limit their losses and minimize risk. 
   
3. New investment opportunities: Generative AI can generate new ideas and identify investment opportunities that brokers and traders may have overlooked. This can help them discover new markets and opportunities for growth.

AI also brings the element of consistency into the trading process, as algorithms can be programmed to follow specific rules and parameters regardless of market conditions. This reduces the impact of human bias and improves overall trading performance.   

Trading signals have been offered to traders for years; the trigger for action, either to buy or sell, is generated by analysis. That analysis can be human generated using technical indicators, or it can be generated using mathematical algorithms based on market action, possibly in combination with other market factors such as economic indicators.   

While auto traders can execute trades based on pre-programmed rules and indicators, generative AI takes it a step further by using machine learning algorithms. As a result, generative AI has become an invaluable tool for traders looking to optimize their performance and stay ahead in the highly competitive world of trading.  

Generative AI in trading has come a long way since the introduction of auto traders and trading signals, recent breakthroughs in AI technology, has opened a whole new level of possibilities for traders and brokers, and today most successful traders depend on bots to increase profitability.  In fact, according to a recent study by JPMorgan, they stated that in 2020, over 60% of trades exceeding $10M were executed using bots. Additionally, the algorithmic trading market is even expected to grow by $4 billion by 2024, bringing the total volume to $19 billion. 

In conclusion, AI can process and analyze vast amounts of data in a short amount of time, which can be useful for identifying patterns and making predictions. However, human traders are able to bring a level of intuition, judgment, and creativity to the decision-making process that AI may not be able to match. 

Additionally, financial markets are complex and constantly evolving, and it can be difficult to program AI to adapt to all possible scenarios. Human traders can adapt to changing market conditions and are able to make decisions based on a variety of factors that may not be easily quantifiable.  

Can generative AI replace human brokers? Well, no one has a clear answer, our vision is that while AI can be a valuable tool for traders, it is unlikely to completely replace human traders in the near future. Brokers should empower their traders by integrating with a provider that offer the most advanced AI trading features, so that on their website or mobile app, they can make more informed decisions, reduce their risks, speed up their response time, and increase profitability. AI should be used in conjunction with human traders to augment their capabilities and improve overall performance.