JP Morgan Chase to use AI to help traders predict market moves
JP Morgan Asset Management is currently leveraging advances such as machine learning and artificial intelligence to build a new software model that the firm expects will be more efficient and profitable in the trading business than humans can be. A team comprised of quantitative analysts and traders are working on developing the highly sophisticated model using artificial intelligence (AI).
AI-based equity trading is more scientific and measurable
Lee Bray, Asia Pacific Head of Equity Trading, says they are shifting equity trading to be more scientific and measurable by creating a model that can take decisions based on mathematical patterns instead of human intelligence. Bray adds that they are looking at AI techniques frequently used by firms like Facebook and Google.
AI drives competitive advantage
A variety of industries have witnessed remarkable breakthroughs, thanks to machine learning and deep learning. These include Self-driving cars, Voice-Activated Assistants, quantitative imaging in healthcare, Adding Sounds To Silent Movies, Automatic Machine Translation, Image Recognition, Automatic Text Generation, Automatic Handwriting Generation. And now we see a particularly active investment trading application for machine learning and artificial intelligence. No wonder JP is aping Facebook and Google, as there exists the opportunity to use large volumes of historical data to check for patterns and gaining the strategic advantage over other traders.
AI goals for the future
JP Morgan’s Asia Pacific equity trading team’s objective is to automate around 50% of trading using machine learning and artificial intelligence by the end of this year. As of now, the algorithm is only offering decision support and recommendation to human traders.
JP Morgan has stated said it invested significant resources to create AI tools for the global equity trading business. The firm has also added that it expects to see a healthy ROI.
JPMorgan Chase is accelerating its efforts when it comes to artificial intelligence. The bank recently announced that it has hired Manuela Veloso as its first head of artificial intelligence research. Before joining JPMorgan Chase, Veloso worked at Carnegie Mellon University as head of the machine learning department. Many big players in the finance industry have joined the big race to use AI, which could eventually be used for a variety of services in the industry.
It does sound scary that the existing roles of humans in investment trading are set to get automated in the near future. In any case, if there is a great deal of money to be made, then the use of such AI based trading algorithms will only go up once their effectiveness is proved.
For example, Bank of America Merrill Lynch has appointed former machine-learning quant Rajesh Krishnamachari at JP Morgan, as the chief of Data Science for Equities group in New York. Bank of America’s fresh data-science team is employing AI and machine learning to gain insights on equity from proprietary data.
Looks like AI is bringing about a huge transformation in financial trading. We may well see AI-based Trading Bots completely replacing humans in the near future!