AI vs traditional algo trading - real performance difference?

algotrader

User: InstitutionalTrader_Question
Subject: AI vs traditional algo trading - real performance difference?
Everyone talks about AI-based trading but is there actual performance benefit over traditional rule-based algorithms? I've been using momentum and mean reversion strategies with decent results. Will AI/ML really improve my returns or just marketing hype?

algotrader

Reply by: QuantResearcher_IIT
It depends on your strategy complexity and data. For simple strategies like moving average crossovers, traditional rules work fine. AI/ML shines when you have multiple variables and complex patterns - like combining technical indicators with sentiment analysis from news, social media etc. AI models are getting better at predicting market volatility through analysis of market indicators, trends and news sentiments. But training ML models requires lots of quality data and compute power. Start with traditional algos, add ML only if you hit performance ceiling.

algotrader

Reply by: MLengineer_Trading
Real talk - most "AI trading" platforms are just using basic decision trees or random forests, not deep neural networks. These are ML techniques but not really cutting edge AI. They can help with feature selection and finding non-obvious patterns. But market is adversarial environment unlike image recognition. What works today may not work tomorrow. My experience is ML helps in risk management and position sizing more than actual signal generation.