In many ways, AI and finance are made for each other. Machine learning and other techniques make it easier to identify patterns that might otherwise not be detected by the human eye, and finance is quantitative, to begin with, so that it’s hard not to find traction.

1. 5/27/2020 How AI Technology is changing Stock Market Investors smarter
https://medium.com/@venkat34.k/how-ai-technology-is-changing-stock-market-investors-smarter-e7bff6a9f5f9 1/4
How AI Technology is changing Stock Market
Investors smarter
venkat k Follow
May 19 · 4 min read
In many ways, AI and finance are made for each other. Machine learning and other
techniques make it easier to identify patterns that might otherwise not be detected by
the human eye, and finance is quantitative, to begin with, so that it’s hard not to find
traction.
Financial firms have also invested heavily in AI in the past, and more are starting to tap
into the financial applications of machine learning (ML) and deep learning. Artificial
intelligence in stock trading certainly isn’t a new phenomenon, but access to its
capabilities has historically been rather limited to large firms.
This week, we’re joined by CEO and Co-founder of Kavout Alex Lu, whose company
offers AI trading applications for enterprises and individuals. Lu speaks today about the
kinds of patterns that traders now have access to in finance, and he gives examples of

2. 5/27/2020 How AI Technology is changing Stock Market Investors smarter
https://medium.com/@venkat34.k/how-ai-technology-is-changing-stock-market-investors-smarter-e7bff6a9f5f9 2/4
ways Kavout and other institutions are using artificial intelligence in stock trading to
build better and more personalized products and services.
Also Read: AI in Accounting & Finance — How AI Will Impact The Accounting &
Finance Industry?
AI and machine learning, quantitative investing and trading
Eventually, Wall Street, when they looked at AI models, found that by using machine
learning they can number crunch millions of data points in real-time and capture some
of the correlations that traditional statistics models could not capture, and that is the
dollar track to go after today. Especially the deep learning models, a new trend in the
last two years.
This gets the attention from the big boys on Wall Street, and they are trying to recruit
people from Google, from Microsoft, from Apple and IBM Watson, to help them build
huge AI clusters, to leverage this technology for trading and investing today
At the very beginning of the last few years, only some of the very large hedge funds and
financial institutions, like Goldman Sachs, were able to gather enough resources to
invest in this field. So today it’s still not common knowledge among financial
institutions, and Kavout is one of the only firms investing in this direction;
I think it’s going to be a very popular space, based on some of the data we see in 2015, in
the hedge fund world, the AI-based trading firms are doing pretty well versus the rest of
the hedge fund industry is not doing that good. I think in 2016 and 2017, this space is
going to get very crowded, but it’s not something everybody can do.
ML has been evolving in the last 15 years, and deep learning is a breakthrough
technology and helping people to manage lots of data sources and come up with new
patterns to help estimate trading, ideas, and make better investing decisions.
I think that’s also why you see so many big firms investing in this area, and also you see
Apple just acquired an ML company in Seattle, Turi…so not only on Wall Street but also
on the traditional big tech companies are moving into this space.

3. 5/27/2020 How AI Technology is changing Stock Market Investors smarter
https://medium.com/@venkat34.k/how-ai-technology-is-changing-stock-market-investors-smarter-e7bff6a9f5f9 3/4
We’re facing thousands of stocks to pick every day, it’s a very daunting task; today by
using AI, we can do all the number crunching, look at all the news media, the social
media, blogs, and also the real-time codes, we can scan thousands of stocks in real-time
and give you the best idea, so that’s where the technology is very good today.
In our company, we built something see look at all the fundamentals, the technicals, and
also momentum for the traders, and we come back with a score to rank every single
stock.
Now all the traders have so many real-time streaming news, and to mine information
from these unstructured data sets becomes very important, so we need new technology
to handle this, which is new even to Wall Street, but with ML and deep learning we can
now look at all these unstructured data sets and mine lots of trading insights which we
could not do before
We can do all this today in natural language processing, which means we can have a
computer understand the semantics and meaning of how people say something…and in
news, this could be something positive or negative about certain companies, and that’s
something we call sentiment analysis.
We are building something called a sentiment score, which means we are leveraging all
the sentiment we collect from traders, news, blogs, and we’re collecting some of the data
from transactions. For example, we collect all the insider data trading sets, so we know
for which company, which CEO is buying or selling stocks; try integrating this
transaction data with the trader’s sentiments, and we can come up with a better score to
know how people think about a set of stocks.
The other is chart pattern recognition; on Wall Street, we call these people chartists, so
firms have people to look at charts every day and recognize some patterns, but today we
have technology where we can scan every single stock and find all the tradable classical
chart patterns, and you don’t have to do it by using human eyes; that will save you lots of
time and help you capture more trading opportunities.
There’s a very interesting study…all the robotics advisory and financial planning done
today are assuming you stick to the strategy for 30 or 35 years, but the study shows most
people change their strategy every 3 to 5 years, which shows the assumption for all these

4. 5/27/2020 How AI Technology is changing Stock Market Investors smarter
https://medium.com/@venkat34.k/how-ai-technology-is-changing-stock-market-investors-smarter-e7bff6a9f5f9 4/4
Robo-advisors does not work with all users…so we have to build new technology to
consider people’s behavior and come up with a more adaptive asset locator.
Stock Markets Share Marketing Aiservices Aisolutions Mlservice
About Help Legal
Get the Medium app