Artificial intelligence has led to some pivotal changes in the financial sector. Fintech companies are projected to spend over $12 billion on AI this year.
A growing number of traders are taking advantage of AI technology to make more informed trading decisions. AI technology has actually changed stock market investing as we know it.
There are a number of ways that traders can benefit from AI. Some use machine learning technology to create models that more accurately predict price movements. However, some have started using AI to automate many trading decisions with algorithmic trading.
AI Helps Traders Automate Their Transactions
Algorithmic trading refers to a method of trading based on pre-programmed instructions fed to a computer. It relies on sophisticated AI capabilities. It’s the inverse of the conventional type of trading where people make decisions based on sentiments and convictions.
Algorithmic trading aims to capitalize on the greater speed and mathematical power of computers relative to human traders to get better results. The AI algorithms that it uses can identify trading opportunities most humans would have missed. It’s a massive sector, worth $13 billion as of 2021, and yet still growing, projected to witness a compound annual growth rate (CAGR) of 10.5% from 2022 to 2027.
There are many requirements to be a successful algorithmic trader and the most critical one is knowledge of both the AI technology behind it and the strategies that help it work effectively. You must have detailed and up-to-date facts about the financial markets to make smart decisions. You also need sufficient computer programming knowledge and a background in AI to generate machine learning algorithms and implement them using codes the computer can understand directly.
You can get the required knowledge and skills to be an algorithmic trader in many venues, e.g., in college, a local library, coding boot camp, etc, which are fairly common. There are also some uncommon mediums, such as anonymous online communities, that are often overlooked.
We consider anonymous communities to be an excellent platform through which algorithmic traders can gain knowledge about their field, with clear reasons. They can create AI applications that can streamline their trading decisions.
One of the best things about the internet is anonymity, although it has its downsides. An anonymous community is an equalizer, where people are judged primarily on their contributions instead of clout. This factor constitutes a motivation for users to help each other with solutions and maintain the vibrance of the community. They can help each other learn more about AI to develop valuable applications to improve their trading decisions.
The key for algorithmic traders to learn through the web is to know which communities cater to their needs. There are many such communities to choose from, but some are better than others. Some of the better ones aren’t even popular but offer great value to their users.
The best online communities for algorithmic traders to learn more about AI include;
- ● QuantConnect Community
QuantConnect is one of the most popular platforms for algorithmic trading, and it includes an online community where users can converse in tandem. The trading platform has processed over $13 billion in trades since its inception, indicating a large user base. Many people can learn about the benefits of AI technology with it.
On the official QuantConnect community, you can find a vast range of discussions concerning automated trading and participate in them. The topics are categorized, making them easy to find. For example, you can find discussion threads on stock selection strategies and risk management.
One of the features that QuantConnect uses to encourage discussion is by providing cloud credits to active community members that they can use on the trading platform. This system encourages the most skillful traders to share their knowledge to earn credits.
You’re free to participate anonymously in the QuantConnect community as many people do. But, you can also use your real-world identity if you wish.
Reddit may need no introduction, as it’s very popular, with over 430 million monthly active users. It’s a news aggregation and discussion website containing thousands of distinct communities (called subreddits).
There are many people on Reddit with a strong background in AI development. With a massive user base, Reddit represents a hub of information for people that care to seek them. The key here is knowing which subreddits cater to algorithmic traders, and some of the best ones include r/algotrading, r/algorithmictrading, and r/python.
R/algotrading is the most popular algorithmic trading subreddit, with 1.5 million members. On it, you can find virtually unlimited discussions concerning every topic related to the sector. You can seek advice on trading strategies, recommendations for trading platforms, help with parsing data, etc. For example, check out this thread about effective strategies to get started in algorithmic trading.
R/algorithmictrading is a much smaller community compared to r/algotrading, with just nearly 8,000 members. Like the other, participants can discuss topics related to quantitative trading and exchange solutions to their respective problems. One of the advantages of participating in a smaller subreddit is the low noise-to-signal ratio that makes it easy to filter out mundane information.
R/python is primarily a subreddit for the eponymous computer programming language. But you can find a lot of discussions about algorithmic trading because Python is the primary language used in the sector.
- ● MQL5.community
MQL5 is a dedicated online community for algorithmic traders worldwide and one of the most popular. This community offers a great utility to users, including financial data, ready-made AI trading algorithms, articles, technical indicators, an official forum, and live chat.
Many people are often discouraged by the thought of creating trading algorithms from scratch and implementing them through AI-based computer programs. If you’re in this camp, don’t be distressed. One of the best features of this community is that you can buy trading algorithms built by other professionals and implement them on the MetaTrader 5 platform with your capital.
Likewise, if you have the skills to build functional trading algorithms, you can earn money by selling them to other members of the community. This way, you can make money trading and also by offering your expertise to a vast user base.
Having the right market data is inseparable from being a successful algorithmic trader, and the MQL5 community helps you in this aspect. It offers quotes for global asset markets, including securities, commodities, and derivatives. This data helps you decide the right way to trade.
On this platform, you can also access a loaded library of articles about algorithmic trading. For example, see this article on how to design a trading system from scratch. These writeups by industry professionals represent a practical source of knowledge to help you become a better algorithmic trader.
The community’s official forum allows users to create discussion threads and exchange ideas that other people (including non-registered users) can read. For example, here are discussion threads on signal systems and how to evaluate market conditions. These threads, often involving traders from around the globe, are also great places to gain knowledge.
AI Has Helped Traders Leverage Automation Via Algorithmic Trading
Knowledge is power rings true in every sector. You’re likely to make costly mistakes if you don’t have a good comprehension of the complexities of algorithmic trading, which requires you to have a background in AI. An algorithmic trader mustn’t just learn but must continue to stay updated on developments in the rapidly-evolving industry and the new AI capabilities that they can take advantage of.
The anonymous communities we listed are good examples of online hubs where you can learn a lot about AI development and algorithmic trading for free. From discussion threads on niche websites like MQL5.community to tutorials on large subreddits, there are unlimited things to learn.
AI and algorithmic trading is pervasive in all global asset markets. For example, it makes up 92% of forex trading activities worldwide. Though a massive one, the industry is yet still growing, with many more developments to come propelled by the increasing availability of sophisticated computing resources. If you’re up to the task, board the ship and take advantage of the increasing opportunities at hand. You will discover the great potential of using AI for algorithmic trading.