Not too long ago, most people thought of artificial intelligence as something that was only really useful for large companies and advanced industries. High-end tech makes for expensive applications, which meant that in the early days of what we might now call modern artificial intelligence, average people didn’t have access to very many direct uses. We would hear occasionally about how various industries were implementing AI, but always in a way that seemed to be behind the scenes, or otherwise inaccessible like personal investment.
Things have changed in recent years though, and now people can make use of a variety of AI-related functions and tools, for innumerable purposes. On a personal level, people install artificial intelligence devices to make their homes smarter and more energy-efficient and even access a simpler form of artificial intelligence when they interact with mobile assistants like Siri or Alexa. In small businesses, people use machine learning and advanced data programs to gather consumer data and influence marketing efforts or to more accurately keep the books in a way that legitimately helps with financial management. And in personal ventures, people can use AI to help with blogging or a range of other creative projects in the digital realm.
Clearly, artificial intelligence is becoming more practically useful for a wider range of people, and will likely only continue to do so moving forward. Indeed, many believe that it won't be long before virtually all of us are using artificial intelligence regularly in our day-to-day lives, in one way or another. But for some, the expanding utility and increased usage of this type of technology begs a specific question: Can AI also help people to profit from personal investments? There really isn’t a definitive yes-or-no answer to that question, but we’ll delve into the idea below.
We should start by acknowledging that there are doubts about AI’s effectiveness in investment models. It’s undeniably true that hedge fund managers and other major investment entities are taking advantage of advanced analytics, but in a roundabout way, this actually makes most trading algorithms more or less moot. With high-powered investors applying intelligent analysis to data, everyone can see, and for an incredibly high volume of trades, the job is essentially done; an individual trying the same trick after the fact won’t reap the same benefits, because the hedge funds already doing it hold enough sway to change the conditions. That doesn’t mean that new algorithms and new artificial intelligence analyses can’t be worked up, nor that new ways of inputting data can’t be developed. To be sure, there will be people working on efforts like these for as long as there are markets to trade. But because of heavyweight investors’ head start on AI, some do see AI for personal investment as a lost cause.
That said, it’s also worth considering different kinds of investments altogether. The above discussion on artificial intelligence has to do largely with entities and individuals trading stocks in a straightforward manner and in traditional markets. In these conditions, the notion of AI being impractical for individual investors makes some sense. But where some alternative investment methods and assets are concerned, AI may wind up being more helpful to individuals looking to gain greater insights and drive more profitable strategies.
As an example, consider traders who operate through contracts for differences (or CFDs). The fundamentals of CFD trading are such that investors are essentially looking to capitalize on assets’ total gains or losses over a period of time — as opposed to buying and selling regularly to take advantage of more incremental fluctuations in value. The crowded artificial intelligence investment market alluded to above concerns the latter — the constant buying and selling that both impacts and looks to profit from moment-to-moment changes in asset prices. In theory, as mentioned, an individual using advanced analysis might not be able to keep up. However, an individual may be able to use an AI-driven tool to gain insight into broader movements. This can inform something like a CFD trade, wherein a loss or gain over time matters more than the smaller and more temperamental fluctuations along the way. In other words, if an intelligent analysis tells you where an asset is likely to be in two weeks, as opposed to i four hours, you may be better able to capitalize on the information.
In addition to different methods of investment, we also mentioned alternative assets, by which we’re essentially referring to commodities and other investable entities outside of the market. While some of these – such as gold, silver, and oil – are traded at a very high volume, they can also be somewhat less prone to quick or dramatic changes (the recent oil crash notwithstanding). With these as well then, it’s possible that using artificial intelligence tools can clue an individual trader into likely patterns over time. Said individuals can look to profit from a predicted long-term pattern rather than short-term movements.
As you can understand from these points, it’s difficult to say whether or not ordinary investors can hope to benefit from the use of artificial intelligence. Some, again, see artificial intelligence as being somewhat overblown where investors are concerned and believe the technology will continue to be useful only to massive hedge funds and other large investment entities. Others see some potential perks, particularly where some slightly less traditional investment ventures are concerned. There is no universal answer.
One thing we do know, however, is that AI trading methods are on the rise, backed by improving technology and – despite mixed results – consistent funding. With this being the case, and with artificial intelligence tech generally becoming more accessible to the general public, we can at least theorize that more investors are likely to give the technology a try in the coming years. It may be that in that time we'll gain a clearer picture as to whether or not the automated activity can help investors to generate greater or more consistent profits.