In the ever-evolving landscape of financial markets, understanding and managing trading psychology has long been a formidable challenge for retail traders and investors. Despite the availability of resources on fundamental and technical analysis, over 85 per cent of retail traders continue to incur losses, indicating the existence of other contributing factors.
However, a groundbreaking solution has emerged, promising to revolutionise the way we perceive and navigate the complexities of trading psychology.
Hoc-trade, an innovative AI-driven platform, represents a significant advancement in trading psychology on multiple fronts. It transforms previously qualitative applications of trading psychology into quantitative insights, providing traders and investors with a deeper understanding of the impact of their emotions on performance.
At its core, Hoc-trade provides comprehensive analysis that outlines identified trading behaviors, severity levels, performance impacts, and underlying contexts. Leveraging AI, Hoc-trade bridges the gap between behavioural finance concepts and trading decisions, empowering traders with actionable insights and education.
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Hoc-trade has conducted a study with the ultimate dataset encompassing 2.75 million trades of in total 6.5 thousand traders trading real funds. The data collection criteria stipulated that traders must have a minimum total of 50 trades, including at least 10 trades identified as having an issue.
The determination of whether a trade was categorised as having an issue or not hinged on surpassing a specified threshold of detrimental behavioural issues within a singular trade. These behavioral issues were discerned exclusively from the trade history of the user up to the point of deciding the subsequent trade issues.
The result is eye-opening! Through over two million trades of data, Hoc-trade AI categorises trades into two distinct possibilities:
- Those exhibiting behavioural issues
- Those that do not
Statistically, more than 90 per cent of traders lose in FX trading. This is confirmed in the study when a trade is classified as having an issue. The average performance of such trade is -1.15 per cent of the traders’ balance.
However, when AI technology is introduced, the average performance shows an improvement at -0.43 per cent. While a trade without issues has not yet reached a profitable outcome, there is already a significant uplift in performance of up to 63 per cent!
The impact of Hoc-trade AI has been demonstrated across millions of trades, highlighting its potential to address the persistent underperformance experienced by retail traders and investors. Recognising the significance of trading behaviors and psychology in shaping market outcomes, the team at Hoc-trade embarked on a mission to develop an AI-powered trading analytics tool designed to monitor and mitigate detrimental trading behaviors.
The results of Hoc-trade’s analysis underscore its efficacy in identifying destructive behaviors and predicting underperformance in trades. Trades free from issues demonstrate significantly better performance, reaffirming the pivotal role of trading psychology in shaping trading outcomes. While AI has yet to optimise for all potential behavioural issues, its impact on enhancing traders’ performance has already demonstrated significance.
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Looking ahead, Hoc-trade envisions a future where AI-driven insights revolutionise retail trading and investments. By providing personalized insights, establishing causality, and quantifying issues, Hoc-trade paves the way for unprecedented opportunities for learning and improvement.
With the capacity to identify negative trading behaviors, filter out undesirable trades, and alert traders to emotional decisions, Hoc-trade AI heralds a new era of user protection and empowerment.
In conclusion, Hoc-trade AI offers a distinctive opportunity for brokers, exchanges, and other entities within the trading industry to integrate groundbreaking technology that delivers tangible benefits to their traders. As the retail trading landscape continues to evolve, Hoc-trade remains at the forefront, driving innovation and transforming the way we approach trading psychology.
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