Last update 2020.08.11
This article will explain at a high-level how Wiseinvest integrates the latest advances in financial technology (fintech) to trade forex automated in partner brokers or by professional-grade trading signals in the broker of your choice.
Given that Artificial Intelligence (AI) can be a buzzword and a misnomer, as many cases of layered-automated, are mistakenly called AI, let’s first talk about the background of automation in forex markets, and how AI is changing the investment market.
Automation in forex trading
Over the two last decades, the foreign exchange (forex) markets were saturated with automated trading systems, from retail to institutional traders, thousands of forex robots across the world were touted as the next-generation technology that everyone wanted to have.
Unfortunately, many trading systems of the past decade were short-lived and eventually could not adapt to changing market conditions. As a result, many forex trading systems were overpriced and did not meet performance expectations.
Automation versus AI
Fast forward to today, AI is the next-generation technology that is quickly changing industries and has now arrived in retail forex trading.
We at Wiseinvest believe that most automated trading systems over the last decade are no longer effective because the forex market has become more efficient, in addition to trends lasting for shorter time-frames.
AI in Forex in 2020
Automation alone is no longer enough to build a forex trading system, and the use of AI, such as machine learning and neural networks is the way forward.
Through the use of AI, proprietary math, and our ability to incorporate fundamental news analysis algorithmically, Wiseinvest has developed a suite of 40 trading strategies as part of our automated AI-Trading and AI-Signals service.
Forex AI-Trading and AI-Signals
Our AI investment solution is the result of years of research and development by specialists in Artificial Intelligence, Finance and Mathematics, who combined their skills specifically to design the best tools for helping traders invest automated or manually with AI forex signals in the forex market, regardless the experience level.
By programming in non-application-specific code, such as Python, Wiseinvest doesn’t rely on third-party applications to operate our fx trading strategies.
This is an important distinction that helps make our AI trading solution comprehensive and versatile compared to many strategies offered on the internet, which are constrained by the platforms they’re created on.
Training the Wiseinvest AI
Below is an example of Wiseinvest AI thirteen-year performance during a backtest on out-of-sample data between the periods of 2006 – 2019.
In other words, below, you can see how our AI trading system would have performed over the historical data for the first time, without any further optimization.
Simulated historical results of Wiseinvest AI trades
Above are the results of thirteen years of our out-of-sample AI trading and AI forex signals performance. The average annual return of our trades is 38.21%. We calculate our returns considering that all trades are invested, and the amount is updated according to the trading results. When using the AI-Trading, our AI automatically considers the account balance available in the broker and the trader does need to update its equity. If you are trading with manual signals, we recommend that you update your amount on the dashboard, and follow as many forex signals as possible.
*It is important to consider that broker fees vary and affect the net profit. The gross results displayed herein are not net of brokerage fees.
How to invest with Wiseinvest AI in your forex brokerage
There are two ways to invest with our AI in forex:
1. Automated with AI-Trading. Check out the 3 steps to trade automated with our AI.
Don’t you have a broker account yet? Our AI is integrated to trade automated with the broker Oanda. Click here to open an account.
With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account and you can monitor the AI trading performance directly on our dashboard.
2. Manually with AI-Signals.
Wiseinvest also provides AI forex signals that perfectly fit into MT4, MT5 and any trading platform. To trade with our AI forex signals, you must simply copy the data you receive from each real-time signal into any forex brokerage account of your choice.
To replicate the performance of Wise AI forex signals, you must simply copy the data you receive from each real-time signal into any forex brokerage account of your choice.
There are five unique variables for each signal, and each must be copied exactly, in order to match the performance of the signal as close as possible.
Each WiseSignals alert consists of the following five data points:
- Symbol (forex pair)
- Direction (long or short)
- Position size (number of units or lots)
- Take profit (price level to exit with maximum gain)
- Stop loss (price level to exit with maximum loss)
Note: be sure to become familiar with your broker’s forex trading platform and order interface, such as by using a demo account before attempting to replicate WiseSignals in your live brokerage account. See our related help section, for more on how to copy WiseSignals.
For trading with manual AI forex signals, check out the forex brokers we suggest clicking here.
When investing through Wiseinvest automated AI trading or AI forex signals, you do not need to calculate or change the leverage in your forex broker account. Learn more about leverage in forex trading clicking here.
Understanding Wiseinvest’ Trading Methodology
To define the set of 40 trading strategies that Wiseinvest uses, our AI ran 14 years of in sample back-testing on all forex 28 major currency pairs using deep learning, with more than 100 different features combined, including sophisticated mathematic models, different time-frames, technical indicators, currency filters, and economic news.
Wiseinvest AI assesses all strategies in real-time to find which one might best perform in the near future given the current market conditions and recent historical price action.
The decisions are not pre-programmed but are rather made entirely by the Wiseinvest AI trading.
Our AI-Trading system automatically places up to 80 trades a month. In the case of trading manually, the AI forex signals alerts are sent on average every four hours to subscribers, from Sunday 5 PM EST until Friday 5 PM EST, which is during the forex trading week.
Our AI-Trading considers in real-time the balance and the type of contract the broker uses, to calculate the position sizes for each trade and customer.
Risk management using AI
When creating our AI trading system, our goal was to develop a set of strategies that perform well most-of-the-time, while managing risk by cutting losses as much as possible when performance targets are not reached for any individual forex trade.
For example, the average maximum loss of each trade varies between 1.17% and 1.37%.
Furthermore, the maximum potential-drawdown is an important factor, and our risk management is intimately related to this performance ranking metric. Additionally, Calmar Ratio and its variants are also taken into consideration by Wiseinvest AI trading.
All of these variables help Wise AI trading optimize its ability to manage risk not just for each signal, but also across the entire virtual portfolio.
Identifying profit targets in forex
Using technical analysis, our algorithm considers not just the patterns of various trends, in including support and resistance levels, and cross-indicators, but our AI trading system is also able to create its own real-time index for each currency pair that is used to identify what is the best direction and target.
In relation to fundamental analysis, the AI makes a correlation within the economic calendar to find news data that can affect specific currency pairs. In doing so, the algorithm is able to identify the following scenarios:
- Market inactivity to not trade or send signals.
- Avoidance of certain risky entries.
- Measure favorable patterns after-events.
Our algorithm is a single multi-layer system integrated with some of the largest forex brokers via rest API and FIX protocol, and its parameters are constantly optimized to reach the best APY, Sharpe Ratio and Drawdown. However it does not change its core rules over time. We have a high precaution to avoid overfitting our models to any price data.
We use two main approaches with AI. The first one is a search of maximum return and minimum drawdown using a Multi Objective Particle Swarm Optimization, which can validate our indicators in a sliding window method to guarantee what are the best parameters for a certain encoding of indicators.
In this way, we selected the set of indicators to use into our second AI, settling a time series classification via Convolutional Neural Network, which the architecture is similar to an AlexNet with data augmentation, based on our own math concepts. This second AI indicates if it is the buy, sell or hold, for a given security.
Our most effective indicators are made by ourselves, primarily developed in Python as a real-time algorithm and based on out-of-sample backtesting. To evaluate our model, we chose the MQL4 language to demonstrate our results on the MetaTrader 4 (MT4) platform. Our main libraries are Matplotlib, NumPy, Pandas, Parallelism with ray remote, and Talib.
Check out the 3 steps to trade forex efficiently with Wiseinvest and get started clicking here.
Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.
The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. The forex broker Fxcm warns that 69.66% of retail forex traders lose money trading CFDs.
The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.