Inthis article, you’ll learn about six of the most critical and “hottest” elements that make up or are associated with Artificial Intelligence in trading today. As an addition, you’ll learn the basics of the tools that will shape the future of trading. First in the biggest and wealthiest funds and then in smaller ones as well.
I invite you to take a journey into this near and far future of trading.
Natural Language Processing is the common name for many tools to analyze written and spoken text: company documents, press articles, news, analysis, web pages, social media posts, company’s product reviews.
Advanced NLP software recognizes context up to about a thousand words. That’s a lot, and soon, there will be more.
The NLP allows you to analyze many features of text, such as whether:
– the text about a particular company is positive or negative,
– it is clear and transparent or obscure and convoluted,
– the authors express themselves positively or negatively about the future.
When we analyze texts of reports and press statements, it turns out that all of the above elements can be a good indicator of future financial performance
Social media texts
Already now, the analysis of posts in social media and online shops allows determining the sentiment – the opinion about the company and its products, which usually precedes the financial results.
Sometimes it is also possible to find and analyze the sentiment of different investor groups about the company and its future which also affects the share price.
"The stripper that will change our World"
The next gigantic step in the evolution of NLP come from extracting written knowledge from millions of books, academic articles and other texts and help create coherent theories of how the economy, or supply chains, works.
This development will give theoretical and practical insights into the factors that affect the financial performance of companies, industries and all relevant economic processes. Already today, we see the first signs of the creation of such tools.
NLP also covers spoken word analysis: statements from TV news, films, other video material, or telephone conversations are automatically transcribed and subject to the same analysis as written content.
Thanks to this, we now have access to knowledge about the level of Forex volume. The systems analyze the volume at major banks and brokers and traders’ volume over the phone. Until last year, data on this was not available in real-time. I will find out if anything has changed yet and write about it in future issues. I know that there were plans to provide this volume in real-time as well.
Full version of the article is available for you in New City Trader magazine (now free of charge):