Artificial intelligence (AI) in forex refers to the use of advanced algorithms and machine learning models to analyse, predict, and execute trades in the foreign exchange market. Unlike traditional trading methods that rely mainly on manual analysis, AI can process vast amounts of data, including price movements, economic indicators, news sentiment, and historical trends, in real time. This allows traders and institutions to identify patterns, forecast market direction, and make decisions faster and more accurately.

AI is often used in forex through automated trading systems, or expert advisors, that can enter and exit trades without human intervention. These systems reduce emotional decision-making, one of the biggest challenges for individual traders. Additionally, AI can adapt to changing market conditions, refining its strategies as new data emerges.

Another significant benefit of AI is its ability to detect anomalies and manage risks more effectively. For example, AI models can adjust position sizes or stop-loss levels based on volatility or unusual market activity. However, AI in forex also has limitations. Over-reliance on algorithms, system errors, or unexpected market shocks can still result in losses.

Overall, AI is transforming forex by enhancing speed, accuracy, and consistency, making it a powerful tool for traders aiming to improve performance and efficiency.