A dedicated writer and digital evangelist. Are you aware of how the buying and selling of stocks were carried out when there was no internet or computers? Back then, stock exchanges had active trading floors filled with brokers and traders. To make a trade or a purchase, they had to shout or use hand signals to alert others about their buy or sell orders. It looked a whole lot like an auction at a fish market today. But then came computers and the internet to change the game completely.
The trader was in deep trouble. A millennial who had only recently been allowed to set foot on a Wall Street floor, he made bad bets, and in a panic to recoup his losses, he'd blown through risk limits, losing 4.9 million in a single afternoon. The trader was taking part in a simulation run by Andrew Lo, an MIT finance professor. The goal: find out if top performers can be identified based on how they respond to market volatility. Lo had been invited into the New York-based global investment bank--he wouldn't say which one--after giving a talk to its executives.
Forex traders have to not only compete with other traders in the financial market but also with themselves. As a Forex trader, you will most often be your worst enemy. Being human, we are naturally emotional. Our egos need validation – we want to prove ourselves that we know what we are doing and are capable of taking care of ourselves. We also have a natural instinct to survive.
The foreign exchange or forex market is the biggest financial market in the world. It is even bigger than the stock market. Moreover, the forex market continues to grow, and one major reason for this is the use of the latest technologies, including artificial intelligence. In fact, it wouldn't be wrong to say that AI is revolutionizing forex trading. According to the 2019 Triennial Central Bank Survey of FX and OTC Derivatives Markets, the forex market has a daily volume of $6.6 trillion. When so much money is at stake, it is natural for market participants to demand and develop tools that help to reduce their risk and increase their accuracy.
With so many advances in technology and analysis tools, it's getting hard for traders to keep up. One of the highly discussed topics is machine learning. If you want to know where these two fields intersect, let's first clarify what each of the terms means. Foreign exchange, or Forex, is the process of converting one currency into another. The value of every specific currency is determined by market factors such as trade, investment, tourism, and geopolitical risk.