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    ARTIFICIAL INTELLIGENCE APPLICATIONS IN SECURITIES

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    ARTIFICIAL INTELLIGENCE APPLICATIONS IN SECURITIES


     

    1: Introduction

    The background of the massive development of artificial intelligence makes it important in the financial field and it is widely used in the field of market prediction and securities trading. The need for artificial intelligence is very important because traditional financial economics and other quantitative techniques can no longer accurately predict the market. AI can process high-frequency big data, analyze financial markets and predict stock returns (Lin et al., 2018). Ultimately, of course, it's all about helping investors make trading decisions and giving them opportunities to profit in a volatile market (Qiu and Song, 2016). Man has always an emotional animal with greed, fear and herd effect as common drawbacks in trading. That is to say, people will make irrational investment decisions under some circumstances, and then affect investment returns.

    1.1  Rationale:

    Automated trading, also known as algorithmic trading, is a method of submitting large numbers of trading orders to exchange using pre-designed computer programs. With the rapid development of telecommunication and computer technology, the mechanism of automatic trading system is becoming more and more diversified (Huang et al. 2019). First, it is a decision system based on a large amount of enterprise information. Using it to predict price movements in equity, commodity, foreign exchange and other derivatives markets have been a challenging task for researchers and investors (Huang et al. 2019).

    1.2  Aim:

    This proposal focuses on the development and application of artificial intelligence in the field of securities price prediction and securities trading, as well as the dynamic development in recent years.

    1.3  Research Gap:

    In the past, there has been little research on abnormal market fluctuations caused by automatic trading. In fact, in some cases, AI-based automated transactions have particular implications for markets and investors. That's one reason some financial firms are reluctant to give up on hiring traders.

    1.4  Research Questions:

    Automated transactions have caused large fluctuations in market prices and hurting investors’ profits, while this may only happen in extreme conditions. How to prevent it from happening again should be taken into account?