AI underpins modern algorithmic trading by analyzing massive datasets, spotting patterns and executing trades at speeds beyond human capability. A London School of Economics study notes that 60–70% of stock trades are now executed algorithmically, enabling rapid processing and reduced transaction costs. Machine‑learning models predict market movements, optimize order execution and adjust strategies in real time, though small data errors can trigger cascading failures.

For AI in capital markets beyond trading, see How is AI being deployed in capital markets operations?