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Deep learning technology has rattled the global financial industry in both positive and negative ways. On the one hand, deep learning technology has considerably improved market efficiency. Tomiwa, a big data author and expert, claims to have beaten the stock market average over the past ten years with a program that he developed with Python. The same kind of program could be used by Forex or derivative traders.
One of the biggest downsides, though, is that it has giving larger institutional traders with deep pockets an even stronger advantage. Robotrading has been a concern in the Investing community for a long time. Deep learning has only widened the chasm of opportunities between large investors and everyday speculators.
Some of these concerns have become even more pronounced during the COVID-19 crisis. The good news is that regular investors can still benefit from deep learning technology. They just need to know how to utilize it effectively.
Deep learning technology could be the salvation of regular financial traders
Whether you are investing in stocks, bonds, derivatives or Forex trading with big data, the reality is the same. These markets are considered to be highly efficient, which makes it difficult for speculators to consistently outperform major indices or other benchmarks in those asset classes. Although major investors like Warren Buffett scoff at the efficient market hypothesis, the average investor is beholden to it.
This has become an even greater concern during the COVID-19 pandemic. The pandemic has led to a terrifying global recession that rivals the Great Depression of the 1930s. As a result, market volatility is at an all-time high. This will be especially true in the global Forex industry, which highlights the need for savvy Forex experts.
Fidelity and other financial institutions have talked about the concerns about market volatility during this crisis. They have tried to educate their customers about the risk and uncertainty that it has introduced. Unfortunately, this information has offered little assurance to amateur investors.
These investors might feel more confident if they know how to leverage deep learning technology to its full advantage. Fortunately, there are plenty of ways to capitalize off of it.
In theory, deep learning technology has made it even harder to identify the few opportunities to beat the markets. However, creative investors understand that there are different ways to employ machine learning technology to carve out a competitive edge. These strategies could be effective during this recession that will persist until the COVID-19 pandemic dies down.
Here are some of the top ways to realize the value of deep learning as an investor. These approaches could be critical to maintain a profitable portfolio during the pandemic.
Hedge your risks with professional money managers that use state of the art machine learning trading algorithms
Some investors prefer managing their own portfolios. There are two reasons that they consider this approach:
- They have an unrealistic sense of confidence. They believe that they can be professional money managers at their own game. This is very rarely the case, because individual traders and money managers tend to realize the same rate of return over the long-term.
- They are hesitant to spend money on third-party services. These investors are often pennywise and pound-foolish. Although money managers don’t usually earn a higher rate of return, they play an important role in establishing goals with their clients and helping them realize those goals.
There is an even more important benefit of using institutional investors to help manage your money in 2020. They have access to powerful deep learning algorithms that can streamline trading and identify unique opportunities. You wouldn’t have access to the same opportunities as an individual trader.
Use deep learning to identify changes in industries rather than market trends
The efficient market hypothesis is predicated on the belief that all financial asset prices reflect all available information. There is a reason that this theory isn’t entirely unassailable, though.
Investors don’t just look at financial information to make decisions. They can also look at information about industry forces that will eventually shape the outlook of a company. Savvy industry experts might be able to use this information to foresee trends that analysts without any understanding of the industry would be able to envision.
Deep learning technology can make it a lot easier to understand the direction of a given industry or the company itself. In the Forex market, deep learning technology might be able to anticipate made sure geopolitical outcomes that the average trader might miss.
In summation, deep learning technology could actually be highly effective at forecasting trends in markets for different assets. You just have to analyze data at a much deeper level.
Deep learning technology is going to be invaluable to traders during the pandemic
The financial industry has been using deep learning and other artificial intelligence technology for years. Deep learning technology will be even more valuable as this recession continues to persist. Shrewd traders will use these algorithms to understand the directions of the market before making critical decisions.