—TechRound does not recommend or endorse any trading, investment or other financial advice or practices. All articles are purely informational—
There is a lot of discussion about whether humans or artificial intelligence (AI) are better at identifying stock market trades. This is especially true as AI continues to change the financial world. But who really has the upper hand in the UK stock market?
The Part AI Plays In The Stock Market
When you use advanced algorithms to look at huge amounts of data and spot trends in the stock market, this is called AI trading. These programs use technologies like machine learning and natural language processing to go through data very quickly, which is much faster than human traders can do.
AI in The UK Market
AI is being used by hedge funds, financial firms, and fintech startups in the UK to make trade methods better. People are interested in AI because it can make choices quickly and without being affected by emotions, which is hard for people to do.
Efficiency: AI can handle thousands of data points in seconds, so buyers can get real-time information about how the market is moving.
Emotion-Free: AI doesn’t make snap choices out of fear or greed like humans do, which can lead to more consistent results.
Some institutions in the UK have had great success by using AI in their trade methods. As an example, hedge funds use AI to look for trends in the FTSE 100 index, which helps them make better predictions about how the market will move.
AI is fast and can be good at what it does, but human traders have skills that computers find it tough to emulate:
- Emotional intelligence: Human traders can read the mood of the market and react to changes in how buyers, especially small traders, feel
- Being able to adapt: When markets don’t act like they should, like during a pandemic or a sudden political news, human traders often show more flexibility
- Understanding the Situation: Changes in UK markets are caused by things that are specific to the country, like new government policies or cultural events, which people are better able to understand
- AI can have trouble with things it hasn’t seen before because it relies on data from the past
- Not Being Able to Predict “Black Swan” Events: People often need to use their reasoning and experience to deal with rare events
In the past of the UK market, there have been times when human buyers did better than AI:
- A lot of skilled traders used what they knew about UK policy to help them make better decisions during the Brexit vote.
- During the COVID-19 crisis, human traders took advantage of chances in tech and healthcare stocks by quickly changing their plans to fit the needs of the market.
- Some important ways that AI and human traders are alike
AI is much faster than humans because it can handle data and make deals in a very short amount of time. But humans are great at figuring out what’s going on in complicated cases where context or instincts are needed.
Risk Management
AI uses prediction models to find risks. This works well when things are stable but not so well when markets aren’t stable.
Human workers make choices based on their experience and gut feelings, which helps them handle emergencies. As humans, we can guess how investors will react and adjust to market emotions. This is especially useful in places like the UK where public opinion often affects investments.
AI is fair and reliable, but it can’t take into account culture or emotional factors.
The Surge of Hybrid Cars
As the financial world changes, the future may lie in a mix of AI and human knowledge. A lot of companies in the UK are already using mixed methods, in which AI handles the data processing and people make the final decisions. Working together makes a measured method that uses the best parts of both.
Problems with Regulations
There are a lot of rules about the UK financial market and using AI in trade makes people worry about who is responsible and how open things are. As AI continues to grow, it will be important to make sure that programmes follow these rules.
A Look Ahead
However, AI is not likely to fully replace human workers in the UK stock market. It will likely play a bigger part. The best results might happen when both are used together, with AI giving insights and people adding their instincts and experience.
Who will win? The AI or the traders? It’s not easy to give an answer. AI is the fastest and best at analysing data, but people are better at adapting, having insight, and knowing how complicated markets work. They both have their place in the UK stock market, and it might be best to use them together.
—TechRound does not recommend or endorse any trading, investment or other financial advice or practices. All articles are purely informational—
