Artificial intelligence for the next stage of energy trading
Oh, so you also listened to the podcast, where Elon Musk was talking about Artificial Intelligence? Us non-billionaires were pretty stunned that a man of his stature was speaking in awe about possible dystopian AI scenarios. So is this technology really close to world domination? Let’s think about it like that: If you are negligent with scissors, you can injure yourself quite seriously. Using them for opening Amazon boxes or cutting out coupons, however, would be their proper and more effective type of use. It’s all about how we implement technologies, and the same is true for Artificial Intelligence.
As of today, AI is nowhere near the threatening hive mind that Elon Musk was predicting. Its skills are “just” appreciated in a couple of applications like search engines, translation software, self-driving cars, healthcare, deepfakes and video games. But in other niches such as energy trading, AI also promises to have a revolutionary impact in the upcoming decade.
In our recent article we covered the evolution of energy trading technology by steps of sophistication. What started as using price models to create a bid matrix quickly evolved into more complex methods like rule-based trading and asset optimization tools. Further use of algorithms helped to react to real market developments, and Integrated Asset Optimization yielded the best results by relying on an even bigger set of market data. An ideal algorithm is already able to deal with any new and unknown scenario all by itself, so how could this still possibly be improved?
Soon enough, trading will be revolutionized by augmented trading. By making proper use of AI, it will bring a lot of momentum to the industry. To give you a better idea what this novel concept is all about, we like to compare it to how AI is enabling self-driving cars.
Driven by AI
One application of Artificial Intelligence and automatic learning you have for sure heard about are self-driving cars. Autonomous driving refers to cars that get you from A to B completely on their own. That means they can accelerate, brake, steer, and park without the influence of a human. Self-driving cars don't need pedals or a steering wheel and, just like a human, are aware of traffic lights, pedestrians, cyclists, cones, and other road users. In a fully autonomous vehicle, the driver is absent and becomes a normal passenger. They can concentrate fully on other activities. What sounds like science fiction is a real technology under development today and could mean a smarter, more efficient way of driving with fewer accidents.
And this is very similar to augmented trading, which is a trading approach where manual trading by humans is replaces with self-learning AI, just like self-driving cars will replace drivers. The augmented trading expert can lean back in their chair into the role of a designer, applying machine learning and AI methods to combine market knowledge with the latest AI technology. They can implement innovative trading strategies to stay ahead of the constantly changing market. Instead of using fixed rules, the AI basically learns how the market works by scanning huge volumes of market data – similar to a self-driving car detecting its surroundings, staying in the lane, switching lanes, and following the GPS to get to the final destination.
Next-stage energy trading
We think that augmented trading and the use of AI will take a similar course for trading as it did for the game of chess, where the introduction of AlphaZero had a revolutionary impact on the chess community. Today, even the best players often can't keep up with AI-developed strategies, surpassing human chess skills. AI was able to discover deeper insights about the game of chess, pushing the boundaries of knowledge in this area, and we are certain that the same will be true for trading.
Trading with AI
At enspired, we are developing augmented trading, which we see as a groundbreaking new way of integrating power assets into the energy markets. AI technology will probably not replace humans in the trading process altogether, but hand on heart, humans are just not great at processing an abundant amount of data-streams on market conditions and power systems in real time, 24 hours a day, 365 days a year. By utilizing the capabilities of new technologies and combining them with the skills and experience of our in-house trading experts, we create a symbiosis that lifts our human abilities to a completely new level.
By deploying self-learning algorithms, designing optimisation strategies that are tailored to the unique features of a particular physical power asset becomes a seamless process, which is orchestrated by our data science experts. Implementing these algos in live trading with embedded monitoring and risk controls is what our proprietary trading platform has been specifically built for. The AI-augmented algorithms are able to learn to recognize changes in market conditions and adapt their behaviour accordingly, thereby achieving superior trading performance for our customers.
In a couple of years, most trading activities will be based on algorithms that are created through AI. In our own trading setup here at enspired, we incorporated AI to a high degree. This way, we are able to offer you strong in-house energy trading expertise to always keep you up to date on changes in market behaviour, and also on changes specific to your situation. As we provide trading as a service, you keep profiting from our increasing trading expertise through time.
The market demand for augmented trading is increasing and we need to keep up. This is why we are looking for an augmented trading specialist to join our team in Vienna. Just like the developers of AlphaZero revolutionised the world of chess, we are striving to bring power trading to the next level. Learn more about gaining a competitive advantage with AI.
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