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How AI can solve trader's never-ending search for edge in markets

AI systems work by crunching through data, trying to find patterns and correlations, and teaching themselves how to approximate future outcomes by formulating algorithms that use the patterns and correlations found in the data.

July 12, 2021 / 03:22 PM IST

By Puneet Tewani

Artificial Intelligence can help you make decisions more objectively as it is based on numerous data points. AI is evolving at a very fast pace and is being used in every field. AI mimics the human brain, we have been using it ourselves from ages, when we track the prices of stock and try to remember them we are creating memory which creates patterns. AI can do the same task efficiently and can include more data point.

AI systems work by crunching through data, trying to find patterns and correlations, and teaching themselves how to approximate future outcomes by formulating algorithms that use the patterns and correlations found in the data. This process of the AI program going through data and trying to learn from it and find insights is known as Machine Learning and the data that is fed into the program is called training data.

Some commonly used machine learning models are Linear Regression, Decision Trees, Random Forest, Logistic Regression, K-nearest neighbours (KNN), etc. The best type of ML model is known as Deep Learning (DL). DL models are inspired by how our very own human brains work and are structured. Just like brains have billions of neurons and neurons themselves are connected to each other and these connections are called synapses—there are trillions of them in the brain! But sometimes to get a reasonably good DL model, the amount of training data that is needed is so huge that it's called Big Data.