Predictive analytics and machine learning are among the most important trends in AI for financial markets. Large data sets can be analyzed in real time using these AI systems.
Predictive analytics also helps identify patterns and correctly predict market movement. These systems predict future trends using historical stock prices, company earnings reports, social media sentiment, and other economic indicators.
Machine learning models, including supervised, unsupervised and reinforcement learning, are applied for better accuracy in optimizing trading strategies.
Example: Goldman Sachs uses Kensho, an AI company to predict stock market trend and automate trades. The AI used by Kensho makes predictions based on big data such as news, earnings reports and market movements.