Along with programming, I have developed an interest in the stock market over the past few years. Over the last few days, all the stock markets all over the world including India, the US, the UK, Germany, Japan, and almost every other country are volatile.
Many experts believe this volatility is because of these reasons:
- Rise in inflation rate
- Interest rate hike from Banks
- Increasing fear of Omicron variant
- Might be a few regional reasons
But, according to me, this might be a reason:
Many stockbrokers and operators have started using Artificial Intelligence that reads all charts and once a stock hits a certain number, the AI model buys or sells stokes. I feel an Artificial Intelligence robot does not have emotions or human intelligence and when trades, it becomes harsh for the market.
Do share your thoughts, I would like to read what you think ? Does this make a difference?
Oldest comments (3)
It can be true given that AI don't have emotions but it can also be driven by people not just AI
Most AI trading bots works on momentum growth. Suppose stock of a company are going up they will be brought by the bot and sold after some time. There are a lot of AI bots which trade in similar way. There are other algorithms.
There are a lot of other factor come when you think about the slow down of the market.
In the last two years, a lot of debt is created by countries. 1 in five US dollar was printed in 2020. Every country is facing a lot of debt right now. For the same reason there is Increase in inflation as well as interest rate --> that's means business will not borrow more money, leading to slow down of economy. Oil countries have increased the oil price because of the focus to shifting to renewable energy.
A lot of people are talking that a big financial bubble is going to burst. Governments have over spend a lot in saving the lives of people or due to mismanagement of resources.
Without an input from an involved insider, it is difficult to say a definite "yes" on this hypothesis. My impression is that AI has been involved in stock trading for longer than we think, so if one ascribes market volatility to AI one must look back a decade worth of stock market data to see if AI induces volatility. At least a decade.