AI-DRIVEN ALGORITHMIC TRADING: ADVANCED TECHNIQUES RESHAPING FINANCIAL MARKETS

Abstract

This article explores the cutting-edge applications of artificial intelligence (AI) in algorithmic trading, examining the transformative impact of advanced techniques on financial markets. We delve into the principles and applications of reinforcement learning in trading strategy optimization, showcasing successful implementations and discussing inherent challenges. The article further investigates the role of deep learning models in market trend prediction, comparing various architectures and evaluating their predictive accuracy. Sentiment analysis techniques are examined for their growing importance in trading decisions, highlighting methods for extracting valuable insights from news and social media data. The integration of these AI techniques into modern trading platforms is discussed, addressing the complexities of real-time decision-making, execution, and risk management. Looking ahead, we consider emerging AI technologies in finance, such as quantum computing and federated learning, while also exploring the ethical considerations, potential biases, and implications for market efficiency and stability. The article concludes by outlining the evolving skill set required for AI developers in finance, emphasizing the need for a multidisciplinary approach that combines technical expertise with financial acumen and ethical awareness. This comprehensive review provides valuable insights into the current state and future directions of AI-driven algorithmic trading, offering a roadmap for researchers, practitioners, and policymakers navigating this rapidly evolving landscape.