This is How Hedge Funds Use Artificial Intelligence

Should you let an AI algorithm make a $100 mln call on your behalf? That’s a concept that several hedge funds have been tackling for a few years. As artificial intelligence continues to prove its efficiency in an increasing number of fields, many investment firms, nascent and old, are starting to engage in its use to make trade decisions—and they’re willing to bet huge amounts of their customers’ money on it.

For years, quantitative hedge funds have been using computer algorithms to make trade decisions. However, those algorithms were driven by static models developed and managed by data scientists and weren’t adept at dealing with the volatilities of financial markets. Decisions made by these algorithms yielded results that were often inferior to those made by human discretion.

In recent years with the emergence of machine learning and deep learning, the branches of AI have caused a breakthrough in the creation of software and are driving new innovations in computational trading…

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