How Machine Learning Can Affect Stock Market Trades
Have you ever used a streaming service before? You know, those programs that make use of a smartphone or computer’s ability to access the internet so that you can consume media or music content? Popular examples of such are Spotify and Netflix.
If you have used such programs before, you know that every time you play a movie or your favorite song, you will be presented with some options that might get you interested, right?
That feature is actually a product of artificial intelligence and it is called Machine Learning. Basically, it is a set of algorithms that tell the program to give you suggestions that you might like and enjoy.
Of course, machine learning is not only limited to certain applications as it is already being utilized in stock market trading as well as part of the professional stock broker in Malaysia.
There are now programs that can look at the actual share market and it can give you nearly accurate results so that you can make trades accordingly. Keep in mind that because these are machines, their setup parameters might not be 100% accurate, although I do have to contend that the machine learning technology, at least in the stock market trading space, is getting more improved each and every year.
Unsurprisingly, since the rise of share market trading programs, the use of machine learning has become more ubiquitous in this day and age.
The premise of such a feature means that the program will look at the market movements and it will notify you if there is a suitable trade you to make. Oh, and I forgot to mention that this happens in real-time which is why so many people who use such a program are always looking at it, ready to strike at a moment’s notice.
How
People leverage the use of this software to capture some alpha, or in simple terms, getting more profits. Since the program can tell if a suitable trade can happen, you can then either buy or sell shares depending on the outcome that is most favorable to you.
However, you have to bear in mind that if you go do some active trades, you run the risk of not having a sizable amount of your investment returned after doing such an activity.
Remember what I said about the computer being able to give you nearly accurate results? You have to factor in that these “results” would mean that a suitable trade can be made, but not with the best profits in mind.
Currently, it will just tell you to trade if there is even the slightest movement in profits. So, you could just end up earning $2 per share if you sold what you had.
However, as I’ve also mentioned earlier, this technology is continually being developed and all of those little quirks might get ironed out. So in other words, the algorithms that run the program might give you more accurate, and therefore, more profitable results. Only time will tell.
In the meantime, you can make use of such a technology and also include some of the good ole’ fundamental analysis into the mix as well to give you a more profitable trade.
