Do you think AI will change the markets in the coming years?

That’s one thing I am worried about. I remember reading here someone who said due to high frequency trading they lost their edge in 2013 and had to stop trading. I guess you could argue that people have been profitable since 2013, so that person just didn’t learn to or bother to adapt, and that could apply again if AI because a major factor in the future.

The edge that tends to die is speed or a pattern simple enough for a machine to find first. What survives longer is judgement on stuff that isn’t in that data yet.

There are a lot of market inefficiencies in crypto and sports betting and thats a lot of Wallstreet marke makers focus outside of conventional stock and commodities. AI can drive the market but like always. People and the market will adapt but price movement from seller to buyer is universal. That's why levels work

hmm, never thought about it like that, thanks

Swing traders exist for a reason.

I asked a similar question in this sub and the other one. You can see it on my profile as the most recent posts, there might be some helpful answers in there

Unfortunately your profile is set to private so I cannot see your posts

The market is going to do what it's going to do regardless of AI. Sure just like with traders it can move the market a little bit for the day but it's the big accounts like hedge funds, 401k's ect that actually move the prices in a meaningful way. Just like humans if it bets against the market the AI is going to loose money. Traders and AI would still serve the same purpose and thats to bring liquidity to the markets.

Bruh u have hidden your posts and comment

i doubt you have a statistical edge from market inefficiencies that AI hasn’t already discovered. if you could find it, LLMs could find it. chances are it is small enough that they don’t care about it. AI is deployed by massive funds that need to trade in large size. trading against that fact is an edge on its own.

Right, no retail trader has a true and literal ‘edge’. Goldman Sach’s supercomputers literally work 24/7 to find, use, abuse, and annihilate whatever tiny edge might be found.

Being small is an edge in itself. Big funds need big fish. You can trade a few NQs and ESs without moving the market. Big funds can’t do that. 

Good point, I do forget that sometimes.

Next twenty years yea. Regarding retail yea. It will do all the heavy lifting

I don’t think so. Sure it can gather data quickly and possibly make a prediction on where the market *could* go but there is still risk involved as it won’t be able to tell the future. There will still be traders who enjoy the thrill of entering trades who are just gambling. AI will probably assist big money but I’d think a human would make the final call especially if it’s millions of dollars. Interesting topic to think about though.

It can have the fanciest tech behind it, but ultimately there is a human watching the PnL and making the go/no go decision for the next day. I like to joke that the "perfect" algo--the one that will make ALL the money in the world--has already been written, but it got shut off after it lost $10k running its first week and was never turned back on.

People say "market inefficiencies" loosely, so depending what you mean by this my answer would vary. If your attempting to scrape 4 ticks 50 times a day, id say the days if this working if not already gone, are going to be gone soon. Doing very small trades based off criteria other than predicting market direction requires speed and analysis and these are computers strong points. Of course I dont know everything and may be missing the reality of what some guys like you actually do. My ultimate vision of Ai changing markets is that it wont really be able to. Behind the scenes likely every day its more of 1 computer fighting another, but for those of us regular guys it doesnt really matter (in my opinion) they still need to move price to make money and there playing with size that will always take time to move, and the Ai wont be able to ignore the battle with supercomputers 1-300 just to screw me out of $1000.

AI doesn’t make the markets more efficient. AI didn’t make computers more intelligent. All AI did was make computers speak our language (hence why it’s a Large Language Model; AI is the marketing buzzword not an actual description of what is happening).  It’s why AI fails at basic things like giving it a bunch of squares and telling it to color the inside. It doesn’t even understand basic concepts like inside/outside… or how many R’s are in the word Strawberry. And you think that pile of garbage is going to make markets more efficient?

I highly doubt that the big banks and funds use free ChatGPT or what you’re describing, I’m talking about super computers operating 24/7 designed to extract cash like they have a license to print money. I’m potentially worried that any edge may be compromised as a result, that’s all.

AI in the current lens, is all LLM. So all of them are GPT, Anthropic, Gemini etc. What you are talking about is machine learning, which has existed since basically the existence of computers and have been and are actively used in algo trading 24/7 by many different super computers. The vast majority of volume on the markets is Algorithm trading. Some of that is just basic execution algorithms, but a good portion are high frequency ones that are scalping. So the answer is, already is happening and has happened for a long time. Every algorithm causes imbalance which invalidates the previous algorithm which then causes new algorithms to find the new imbalance.

How long has machine learning been around?

By AI I assume you mean LLMs as AI has been changing the markets for decades soon. I tried utilizing it I found certain models were excellent at parsing DOM etc.

As long as you trade your own strategy, you will be fine.