Artificial intelligence is rapidly reshaping the trading landscape, creating both risks and opportunities for investors. In this episode of Forbes in Focus, CMC’s head of distribution Kurt Mayell shares his perspective on how traders can integrate AI into their strategy, moving beyond the ‘black box’ model, and the potential for AI to democratise trading.
The following is an excerpt from the conversation. Watch the video for the full interview.
Kurt, welcome to Forbes in Focus. Some traders see AI as an opportunity and others see it as a threat. What’s your take on that and how can traders incorporate AI into their strategies?
It is an opportunity and a threat to traders. Traders need to see AI as a tool and it’s a tool that they need to adapt themselves to, because it’s not going to go anywhere.
I think the main risk to traders is they fail to adapt, and as a result, they can get left behind. If traders use it as a tool, they can get through huge sums of information.
They can then use their intuition and their previously acquired knowledge to make proper decisions and not just rely on AI blindly without taking into consideration what the models are saying and how the models actually work.
There is concern about AI being a bit of a black box, that the systems aren’t fully transparent in their decision-making processes. How can traders build trust in AI, especially when there is real money on the line?
What I would say is that traders do have the right to demand more information about what goes into these black boxes, how the information is analysed, and what the outputs mean.
While that may not be that accessible right now, I do think that in the future, it’s going to be more of a list or a set of instructions that traders are able to take a look at to determine what’s actually coming out of these things.
Retail traders often worry about competing with institutional investors. Do you think that AI has the potential to level the playing field?
Right now, the field is not quite levelled. I think that it still is in the court of institutions and corporate traders, just from the perspective that they’ve got the most access to capital and the most cutting-edge technologies.
AI and AI’s application to trading is currently in the early stages but as time goes on and more and more products become available for the likes of retail traders, it will start to level the ability of one trader who might work for a corporation versus a trader who might work from home. So, I think the outcome will be very positive in the long run.
In a recently released whitepaper, Trading at boiling point: Thriving in a Chaotic Future CMC Markets explores the seismic shift taking place in AI as one of the key factors transforming the trading environment. For more insights from Mayell and other CMC industry experts on navigating this new world order, download the whitepaper here. And don’t forget to watch the video for more insights from Kurt.