Mar 28, 20192 min read

Why Forex Traders Need AI Technology

Renaissance Technologies

Renaissance technologies is an American Hedge Fund. They specialize in systematic trading using quantitative methods derived from mathematical and statistical analyses. The founder being James Simons a famous mathematician and cold war code breaker.

Renaissance's flagship Medallion fund is famed for one of the best records in investing history, returning more than 35% annualized over a 20 year period.

They were one of the first firms to pioneer quantitative trading, this means they use large amounts of data and access the statistical probabilities for the direction of securities. E.g. in Forex they are able to predict the direction of the currency from various pieces of data. This is what the LogicStrategy does and is the first of it's kind in the Forex retail trader world.

Renaissance is one of the alpha Hedge funds which beat the markets multiple times using a quantitative method.

Why don't traders use fundamental analysis?

One of the major reasons why Forex traders don't use a fundamental approach is because of the vast amount of data the person needs to interpret. To do this manually is near impossible, it will require the individual to siphon through thousands of data sources to come to a conclusion on the direction of a currency. This is why so many traders are also attracted to a purely technical approach, who doesn't like something that looks easy to learn without any prior background or education. Technical analysis (price analysis) is attractive for majority of retail traders because they believe they can master it, but it's just one of the tools required to make sound judgments in trading. Artificial intelligent systems such as the LogicStrategy are able to analyse thousands of pieces of data in an instant and come to a conclusion on whether it's good or bad. This is a tool which all traders should be utilizing yet they're sold the dream of achieving their dreams by drawing patterns? If it was so easy hedge funds and investment banks would have just created bots to do this. They have and they don't work by themselves, a wider fundamental factor is also necessary to understand the underlying drivers of the price.

Just as an example Renaissance technology takes in as many factors as possible, ranging from economic data, weather forecasting and data on crops.

If you're a trader not already using AI to come to decisions, don't be disheartened Logikfx have made this technology publicy available in their portal. This is a complete new edge over current retail traders. If you're not using it, you should be. It's time to break out of the retail trader dream, Artificial intelligence is changing the game.