AI Will Democratise Stock Market Analysis For Common Investors, Says Parth Nyati Of Tradingo
In the fast-paced world of finance, technological advancements have continuously changed the way investors and traders approach the stock market. Over the years, artificial intelligence has emerged as a powerful tool, substantially reshaping the landscape of stock trading and brokerage platforms, from supporting market analysis and improving user experiences. However, along with these benefits, there are several concerns about data security and potential misuse of AI-driven tools. In this interview with Parth Nyati, founder of Tradingo, we explore the impacts of artificial intelligence on stock markets from the perspective of an industry expert:
How has AI transformed the stock trading and brokerage platforms over the years?
There are three major ways in which AI is being used to transform stock trading and brokerage platforms. Firstly, artificial intelligence helps in the analysis of potential investment opportunities. AI models capable of training to predict investment and trading possibilities could feed a wide range of market information, such as stock price history, financial news, worldwide events, etc.
Secondly, AI is being used for making better recommendations about how to so business on brokerage platforms by analyzing individual investment and trading patterns.
Additionally, broking platforms are using artificial intelligence for monitoring, fraud detection, and risk management.
What specific AI-driven tools are being used in the industry to benefit retail investors, and how have these features enhanced their trading experiences?
In the current scenario, some investment managers are suggesting that AI can be used for stock market forecasting but there are no specific AI driven tools that are widely being used by retail investors. In order to help investors make investment decisions, it is estimated that several brokerage platforms would provide users with an NLP based interface on their websites.
Has AI improved the accuracy and speed of market analysis to help investors make more informed decisions?
This can save a tremendous amount of time for fund managers who can design AI models that can be used for stock market analysis. After training, the model can perform a day’s analysis in seconds with no compromise on accuracy. However, such models are primarily proprietary and cannot be made available to the general public. In the near future, if some of these AI models can also be accessed by common investors, I envisage a democratisation of such models.
As data security is an important concern in the digital age. How do brokerage firms can ensure the utmost data security while providing accessible and user-friendly services?
At Tradingo, as a brokerage ourselves, we are the custodians of our customers’ personal and trade related data. We also have to make sure that our trading platform is not penetrable. Despite keeping all checks in place, we go through continuous rounds of vulnerability and penetration testing and security audits by approved auditors.
For stock brokers, SEBI has mandated the receipt of CERT+IN certification, for which every brokerage has to comply with rigorous procedures. Cyber security also needs to be taken into account by investors. There is a genuine risk of fraudulent activities on demat and trading accounts if an investor's email or phone account has been compromised.
Could you share any notable instance where AI-driven solutions have significantly impacted the financial success of retail investors?
Some fund managers claim to train AI models to provide more appropriate investment recommendations, but there has been no significant increase in their returns. For example, retail investors are not really given a simplified AI platform that allows them to make trades. No investment recommendations have been made by ChatGPT at this time.
How AI-driven tools can be misused, and what measures should be taken to prevent the misuse or manipulation of this technology in the stock market?
Artificial intelligence can be applied to create factually inaccurate content, which could result in spreading unsubstantiated stories and leading to poor investment decisions. In addition, this can be risky because now AI does not take into account relevant aspects like Corporate Governance adequately while providing investment advice and the reliance on simplistic artificial intelligence for making investment decisions may be excessive. Instances of identity theft may also occur due to artificial intelligence.