Will You Trust AI To Trade For You?

avatar of @readthisplease
2 min read

Just another day on TikTok and I came across a video that is promoting AI trading. I had to laugh for a bit, because I couldn’t help but try to reason a world where AIs make our investment and trading decision, I think it’s going to be dysfunctional and I have my reason. When investing and trading, there is this fun feeling knowing that you predicted the market and it went your way and you made profit off it. You also know the disappointing feeling you feel when you took someone’s market prediction and you loss your money. You feel you could have stayed without investing, but you just had to take their opinion and lose your money too.

source The financial market is made up of bunch of rich people deciding where the market would go, this comes with a lot of factors, could be emotions, politics, economics, entertainment whatsoever. People move the market based on how they, a certain news might come up, the market could move or down depending on the feelings and moods of the market makers or investors. AI is artificial intelligence that runs on codes which are based to be logical, AIs are expected to outsource their result and product based on logical data, but humans are not wired that way all the time. Sometimes humans are logical in making investment or trading decisions sometimes humans are not and are emotional. I once got interested in a crypto project because I loved the UI/UX of their website, it was so beautiful I was emotionally invested and wanted to invest in their project. Will an AI think about that? Does AI know what everyone in the world is thinking?

Let’s say for instance certain countries are at war, who makes profit off this? The guns and ammunition companies and industries right? It’s logical that as an investor you should long these companies because they will be selling guns and ammunition to countries that are fighting each other. Let’s say before they start the war, they make a big announcement saying they would start the war at a said time, trying to stay smart, you start investing in the guns and ammunition companies before the war. Then on the day of the war, these guns and ammunition companies decide that they want to sell guns and ammunition to countries that want to go to war, because they feel it’s inhumane and not logical because it’s the citizens that die and suffer for world leaders disputes. They only want to sell guns and ammunition for greater course like ending terrorism and crime. Which means low sales which might lead to low profit, but your AI bot didn’t know that this could happen, it has already placed a long position for you. Thinking it’s logical for the company to be in profit because they are about to make profit from the war.

This is just an example of how AI trading might not be a good idea. Over time if this AI trading becomes a thing and everyone starts using it, this means the digital financial market is just an entity of AI bots trading against each other which might be catastrophic to the world digital financial market.

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