Could the use of AI ‘trading bots’ revolutionize the world of investing?


The rise of AI investing has led to a flood of offers online, promising lucrative returns. However, experts are warning investors to be cautious about relying solely on AI trading bots. While one in three investors may be open to the idea, John Allan, head of innovation and operations for the UK’s Investment Association, advises waiting until AI has proven itself over the long term. He believes that human investment professionals still have a significant role to play. AI-powered trading bots are not infallible, as they cannot predict unforeseen events that can impact the stock market. Additionally, the effectiveness of AI systems depends on the quality of the initial data and software used to create them. Generative AI, which can create something new and learn from it, has the potential to go wrong if it is fed bad data by human programmers. Examples of AI going wrong include Amazon’s recruitment tool, which filtered out women due to biased training data. AI systems are also prone to bias, inaccuracies, and data leakage. Despite these risks, some investors trust AI more than human investors, believing that machines are objective decision-makers. However, AI investment tools may still reflect the thinking errors and poor judgments of their developers and lack the intuitive experience and rapid reaction of humans during unprecedented events.

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