While winking about the Electronic Communication Network in terms of trading, the first thing that comes to mind is a complex future machine that analyzes vast quantities of data and generates an effective plan in seconds that no human brain can fathom.
The truth may not be spectacular, but it is still efficient. There are a lot of assumptions about the activities of the ECN brokers and a lot of people are wondering whether they are using the AI or not. The article will discuss the topic with its own examples. Shortly to answer, no, the ECN brokers are not using the AI, and their actions are executed in different ways.
Not AI – ECN services
ECN is the superb infrastructure that allows traders to get to the markets faster and bypass the time-consuming request processing by brokers. Furthermore, ECN does not intervene in the relationship between two parties to a commercial agreement.
Finally, because an organization must be both respectable and have a wide pool of consumers in order to qualify as an ECN, ECN can assist its customers with the ability to trade among themselves provided their needs are compatible. The range of options and ability to conclude the most profitable trade, as well as the general rapidity of the transactions, which are normally finished practically instantaneously with ECN, are the most evident advantages of trading with ECN.
ECN traders are able to negotiate their agreements directly, assuring both the liquidity and the efficacy of their actions, by eliminating the timely, middleman part of trading. Furthermore, with ECN, the risk of traders dealing against their consumers is almost eliminated, especially when trading activity with ECN is fully anonymous. Even though the ECN trading may appear to be the ideal answer for increasing the trading efficiency, there are a number of drawbacks to be aware of, first and foremost, it is expensive. Clients must deposit a substantial amount using ECN and there are huge set commissions.
Second of all, the service frequently accommodates togue clients, individual traders will discover that placing a tiny lot within the ECN trading is not reasonable. Finally, because a large number of factors and clients are influencing prices at the same time, there is a greater risk of slippage with ECN.
ECN does not use AI
Artificial intelligence and machine learning are becoming increasingly popular in a variety of fields. That previously appeared like a science-fiction fantasy has become a reality, infiltrating sectors with the sole purpose of increasing efficiency while reducing human elements. In this case, ECN trading is not an expedition either. Although as previously said, ECN does not employ AI in its day-to-day operations, ECN traders can act as AI in their own right. In reality, some of the best ECN brokers provide bots to their customers for free or at a low cost. The benefits of utilizing trading bots are numerous. They labor around the clock, devoid of the human emotions that often stymies traders’ ability to make winning trades. Trading AI can forecast market movements, assess various currency pairings, develop a complicated trading strategy, spot an opportunity and act on it all at once. Moreover, adopting AI software can greatly enhance your earnings while lowering your chance of losing money. Finally, robot traders are ideal for individuals who are just starting out in trading and do not have any past expertise or specialized understanding.
In this case, the disadvantages of trading with bots should not be underestimated. To begin with, they are usually designed to process a vast amount of data until the pattern is discovered. Although it may be the viable answer in some situations, it frequently leads to the robot attaching an excessive amount of significance to an occurrence that might simply be an accident.
Second, the robots often work by closing a large number of little deals every day, which may not be profitable for many in the long term. Third, the bot’s performance is based on original programming, which deprives them of the level of originality and inventiveness that is sometimes required for effective trading.
Finally, while employing AI software, traders are frequently exposed to the risk of fraudulent activities if sufficient investigation into the program source is not conducted.