THE LIMITATIONS OF AI IN UNDERSTANDING MARKET PSYCHOLOGY AND HUMAN EMOTIONS IN TRADING.

The rapid advancement of Artificial Intelligence (AI) has transformed financial trading by enabling market analysis, trade execution, and risk management.However, AI struggles to interpret human psychology, a crucial factor in market behaviour.This study explores AI's ability to predict and react to emotions in stock, cryptocurrency, and forex trading.Using primary data from traders across experience levels, along with a literature review on AI-driven trading and behavioural finance, the research examines AI's effectiveness in decision-making.Findings indicate that while AI enhances automation and trend analysis, it fails to fully account for emotional biases, market psychology, and unpredictable economic events.The study concludes that AI should serve as a complementary tool rather than a replacement for human intuition.A balanced approach, integrating AI insights with trader expertise, is essential for navigating complex financial markets.