How Generative AI-Powered Tools Support Brokers

Generative AI’s unmatched ability to enhance decision-making and inspire innovation has revolutionised every industry. The technology is even more useful in the financial sector, where powerful number crunching, simulations, and swift decision-making are paramount. No surprise then that the global market for Gen AI in trading is forecasted to reach $1.78 billion by 2033, expanding at a CAGR of 25.4% from 2024. Among the highest beneficiaries of the technology are brokers.

Gen AI in a Nutshell

Gen AI is a confluence of Natural Language Processing (NLP) and Natural Language Generation (NLG). NLP facilitates computers to process, understand, and analyse human language. This includes multiple forms of human-generated data, such as text, images and audio. NLG complements NLP, enabling computers to create (or generate) human-comprehensible information. More importantly, it powers machines to use historical data to assess and simulate multiple possible future outcomes with their respective probabilities.

But with so many benefits come a few challenges. In the case of Gen AI, the biggest challenge is ensuring that no kind of bias penetrates generative algorithms. Another prominent challenge is ascertaining ethical, responsible and accountable use of data while staying compliant in the rigorously regulated financial space.

Gen AI Applications in Trading 

Generative AI equips brokers to offer more meaningful insights and early signals, in addition to recommending trade set-ups, to support their traders in taking advantage of market opportunities.

Generate Early Trading Signals

Gen AI models trained on historical data are fed with the latest market conditions and massive information about what impacts an instrument. These models simulate diverse market movement scenarios using NLG, detailed with price, volume, order book and trade info, with their probabilities of occurrence.

As the market evolves, powerful machine learning algorithms assess the direction in real-time to identify (NLP) and inform (NLG) which route the market is likely to take. This helps in the early recognition of order flow and enables traders to minimise the cost of execution and lower slippage.

Acuity’s AnalysisIQ widget blends human expertise with advanced AI to generate resilient trading ideas for all levels of traders. It generates clear calls to action with confidence ratings for every opportunity and a risk/reward ratio ranging from 2:1 to 5:1. Our brokerage technology solutions also include a dynamic email facility. It embeds AI into customised emails that offer personalised, time-specific recommendations when opened, irrespective of when the email was sent. An already opened email also updates dynamically when a market-moving event takes place.

Support Algorithmic Trading

Gen AI models can learn from existing trading strategies using large language models (LLMs) and execute trades. These models can assess portfolios and trading goals to create rule-based algorithms that prevent human emotions or cognitive bias from interfering with the decision-making process. These algorithms analyse massive real-time datasets quickly to drive high-frequency trading.

Traders can use these to either copy strategies or automate trading to reduce execution latency and maximise the benefits of every opportunity. This helps beginner traders gain confidence and continue trading while they learn. Experienced traders can refine their trading strategies and fine-tune execution to optimise their experiences.

Acuity’s AssetIQ facilitates asset-by-asset analysis using traditional data, technical indicators and alternative data to enable better-informed decision-making. The tool examines a vast set of macro and micro-economic factors and overlays them on price charts for traders to verify signals.

Facilitate Risk Management

Financial institutions worldwide use Gen AI models to assess risk. The benefit is now available to traders as well. Gen AI’s ability to simulate a wide variety of scenarios is useful for identifying high-risk market conditions. These include market crashes, liquidity shocks, or extreme price swings. It can also identify market making and other unethical practices to alert traders in time.

The technology reduces manual workload and allows traders to effectively manage risk. Gen AI models can also assist traders in analysing their portfolios and creating risk management strategies for specific scenarios.

For instance, Acuity’s NewsIQ covers diverse types of media to evaluate news sentiment across traditional and non-traditional channels of financial information. It helps traders discover unique insights via easily digestible reports. These insights help traders identify opportunities and risks to guide their trading decisions.

Harness the Power of Gen AI

While an array of free Gen AI tools might be available, they are difficult to integrate with trading platforms. More importantly, they are not trained adequately to generate trading-related insights with high accuracy or at scale. Therefore, brokers need solutions that are designed to support their traders and drive activity on their platforms.

Acuity is an FCA-regulated brokerage solutions provider. We use high-quality data, sourced directly from Dow Jones, to train BloomerbergGTP, a Gen-AI model developed with a focus on financial trading. The combination powers our widgets to assess markets and generate insights that traders can use directly.

Empower your traders by smoothly integrating our solutions to synchronise client communications and track engagement. Schedule a demo to turbocharge your trader activity NOW.