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Research Paper 3

The document discusses the transformative impact of AI and machine learning in financial markets, highlighting their roles in trading, fraud detection, and risk management. It emphasizes the opportunities presented by these technologies while also addressing the associated risks and challenges, such as over-reliance on algorithms and ethical concerns. The conclusion stresses the importance of responsible governance to balance innovation with risk mitigation.

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18 views2 pages

Research Paper 3

The document discusses the transformative impact of AI and machine learning in financial markets, highlighting their roles in trading, fraud detection, and risk management. It emphasizes the opportunities presented by these technologies while also addressing the associated risks and challenges, such as over-reliance on algorithms and ethical concerns. The conclusion stresses the importance of responsible governance to balance innovation with risk mitigation.

Uploaded by

sqatrade
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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AI and Machine Learning in Financial Markets: Opportunities and Risks

The integration of AI and machine learning (ML) in financial markets is transforming trading

strategies, risk management, and fraud detection. This paper explores the opportunities and

associated risks, emphasizing the need for robust governance.

Keywords: Artificial Intelligence, Machine Learning, Financial Markets, Trading, Risk Management.

1. Introduction

AI is redefining financial markets by enabling predictive analytics and algorithmic trading.

2. AI in Trading

- Algorithmic trading leveraging real-time market data.

- Example: High-frequency trading driven by AI algorithms.

3. Fraud Detection

- AI models identifying unusual patterns in transactions.

- Success stories in combating financial crimes.

4. Risk Management

- Predictive models for market volatility and credit risks.

- Importance of model validation and monitoring.

5. Challenges

- Over-reliance on algorithms leading to flash crashes.

- Ethical concerns in AI-driven financial decisions.


6. Conclusion

The responsible use of AI in finance requires balancing innovation with risk mitigation.

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