The Impacts of Artificial Intelligence on Financial Markets: A Study on Machine Learning Algorithms in Stock Trading

The advent of Artificial Intelligence (AI) has had a transformative impact on various sectors, and financial markets are no exception. One of the most significant applications of AI in finance is the use of Machine Learning (ML) algorithms in stock trading. This paper explores the role of AI, particularly ML models, in financial markets, with a focus on stock trading. It investigates how ML algorithms, such as regression models, decision trees, and deep learning networks, are being utilized for stock price prediction, portfolio optimization, and risk management. The study highlights the benefits of AI, including enhanced predictive accuracy, faster decision-making, and reduced human error, but also delves into potential risks such as market instability, algorithmic bias, and regulatory challenges. Through a review of current practices and case studies, the paper examines the effectiveness of AI-driven trading strategies, and offers insights into the future of AI in financial markets.