December 4, 2022

Algorithmic Trading and AI Trading

Algorithmic Trading and AI Trading

Technology has revolutionized everything, and when we talk about technology, we cannot skip Artificial Intelligence (AI) which is being implemented at Bixo Trade. AI is whereby machines simulate human intelligence, such that they are programmed to think and act like humans, but now more efficiently. With AI, machines can also do learning and problem solving just like humans.


AI has been used in many industries including trading. Electronic trades account for almost half of the total revenues from cash equity trading. Most companies such as hedge funds, Crypto/Forex, use AI-powered analysis to get investment ideas and build portfolios.

AI makes it easy to analyze data and execute trades at the best price. Through AI, analysts can be able to forecast markets with more accuracy. It is also easier for traders and investment firms to efficiently mitigate risks for higher returns.

Algorithmic Trading and AI Trading

AI-powered trading raises new questions:

As much as AI has been believed to be the solution to trading technologies, there are still questions about what it can do. When it comes to market prices, it has to be predicted by AI as they are mostly random. Prices cannot be predicted as the market is very volatile. That makes machine-learning based predictions not to be very accurate hence may not be the best for automated trading. That has made traders opt for quant trading strategies such as arbitrage trading and high-frequency trading. They rely on a sequence of predictable behaviors and biases.

How profitable are the best stock trading algorithms?

Algorithmic trading is whereby you set certain conditions such as price and market conditions and once the preset conditions are met, a computer program automatically trades at high speeds and volume. A computer program is used to execute the trade as it can do it more efficiently and fast as compared to a human. It can be done at a high frequency and speed that may be impossible to do in person.

The preset conditions may be the time, price, quantity, or any other market condition. Algo trading has also been used to increase efficiency as it rules out the possibility of human emotions on the trade, making the market more liquid, and the trading more systematic.

The best stock trading algorithms are more profitable compared to traditional human trading. There are many automated trading strategies in the market and they all come with different price tags. When estimating the returns, do not skip on inflation which is normally a rate of about 2% a year.

It is hard to have all the inside information on the profitable algorithm as most people who have developed one keep it a secret. That explains why most large-scale quantitative investment firms such as Bixo Trade are secretive about their trading algorithms as they take it as their secret sauce.

What is the difference between AI trading and Algo trading?

Algo trading is whereby a computer program follows a set of instructions set to execute a trade. AI trading, on the other hand, is whereby machine learning is used to observe, study and analyze market conditions, trading patterns, and data, then predict what will happen.

In Algo trading, it is a human who sets the conditions that should be met. With AI, artificial intelligence is used to set conditions after going through different parameters and analyzing them

How is machine learning used in finance?

Machine learning has been used for identifying complex trading patterns across different markets in real-time. It takes advantage of its high speed and big data processing power to give real-time updates. That explains why it is used in wall street and the United States in general.

The finance industry has taken advantage of technology to analyze conversions and financial data. That makes it easy to sift through relevant notes and large amounts of data and make market insights in real-time.

Bixo Trade is using the AI system to process data to rank stocks. The company uses AI for pattern recognition and price forecasting so that it can be able to provide high return to its investors. It uses AI algorithms to make its portfolios.

Machine learning has helped finance companies to come up with algorithmic trading strategies that have helped to solve investment challenges. It has made it easy to analyze data without necessarily having in-house expertise.

AI trading companies, again such as Bixo Trade have an AI system that works in three phases, the first is a strategy where observation and analysis of potential trades are done, the second one is where orders are created and the third is where active orders are implemented and machine learning is used to analyze performance.

Machine learning has been used by investment companies for coming up with strategies such as intelligent asset allocation for deep learning and prediction of different assets of a particular portfolio. Machine learning has been used for creating a fully autonomous trading system without requiring any updates or adjustments.

How to start with algorithmic trading using machine learning?

For starters, to do algorithmic trading using machine learning, you need to have coding skills. Once you know to code, you can then learn on the different machine learning techniques such as classification, clustering, and regression.
When machine learning and algorithmic trading are integrated, you have to set the instructions to the computer and machine learning changes those set conditions according to the market conditions. Even though neural networks work, with machine learning you don’t have to monitor the conditions to set them for algo-trading.

Machine learning algorithms are therefore the solution to trading. Even though they are not very accurate, they are very accurate especially for making predictions on price movements of stock.

A Solution for Crypto and Forex investors.

Bixo Trade takes advantage of AI in trading as it acknowledges that AI will never be on the same level as human trading. It uses advanced AI trading tools to make sure that trading is highly profitable. It monitors and analyzes many potential trades to explore low-risk opportunities available. You get a trader-operated artificial intelligence managed trading account with over 100% compound return guaranteed regardless of the market condition.