By Samuel Leach, founder of Samuel and Co Trading.
When entering the world of investments, there are many factors to consider, from managing and measuring risk, managing assets and liabilities, and one of the most complex decisions is deciding where to invest. On top of this, there is the management of your portfolio. Other tools make this process easier, including brokerages who can take advice, but even with these tools, it’s still the person behind the screen who makes the decisions. Imagine if this was easier, if there was another brain that measures risk, decides whether to prioritize investments and manage your portfolio. Take a step into the future of the financial industry with two words we are all familiar with: Artificial Intelligence.
Investment and Portfolio Management
Getting your head around all the different types of trading can be challenging. Even the difference between trading and investing can be a chore to wrap your mind around. Once you’ve got the basics down, it’s time to put your sights on portfolio management.
Portfolio management involves accumulating and overseeing a portfolio of trades and investments. The art of this plan is to ensure that this group of investments meets the long-term financial goals of the person. To achieve these financial goals, factors are integrated within portfolio management to ensure success.
It is accepted that there are two ways of managing a portfolio. It works and it doesn’t. Effective management involves the investor creating a strategy and calculating the sale and purchase of stocks so that the trader or investor can compete with the existing market. Passive management, however, aims to match the market by following the trend by reproducing indicators.
I would imagine that many investors would be envious of a situation where they can easily manage a portfolio but still have the ability to beat the market and reap the rewards. There may be a solution in artificial intelligence, something that has been used to some extent in the trading environment.
How Can AI Help Investments?
As defined by IBM, “Artificial intelligence uses computers and machines to mimic the human mind’s problem-solving and decision-making abilities.” If this is used to invest in dollar funds it will appear in the eyes of many traders.
Yes, the results are good, but not tragic. As reported in Forbes, “it’s growing, not changing.” However, this does not mean that it will not work in the general industry. My success in the markets depends on using tried and tested algorithms, which Samuel and Co Trading students can use. Artificial intelligence is a set of algorithms that work together to predict unexpected situations. For the future of investing and trading, using AI may change the game and may change the way we invest. However, it is important not to rely on this technology alone. Although it is designed to predict the unexpected, it is important to keep an eye on the game and not get carried away.
The Reality of Risk Management
In terms of helping you place trades and build your portfolio, it can be an asset, but you have to be aware that it can’t do it together.
However, when it comes to risk management, there is a big change for the better. Applying artificial intelligence to investing and trading may have some volatility. In terms of risk, AI is really coming into its own, as it can measure and manage changes in the market while looking for any malicious transactions. Artificial intelligence can be a great tool when it comes to protecting your money. Here at Samuel and Co Trading, we encourage trainees to follow the rules of the market. However, using certain algorithms can help when it comes to risk management, especially for those new to the market.
AI: An investment in your future
Is artificial intelligence the future of investment and portfolio management? To summarize, if used to its highest performance, it can be a professional who manages your portfolio, predicts and generates your returns, and manages the level of risk. Especially considering the latter.
Artificial intelligence is becoming increasingly prevalent in modern investments. According to Statista, the use of machine learning in investment banking will increase by 63% in 2020.
Artificial intelligence seems to be entering all aspects of life, even in your personal life, with voice-activated light switches and self-driving cars. Why not apply this to your professional life and let it control some of your investing? While it may not be a complete life change, a helping hand is always a bonus.