The AI and machine learning revolution in financial markets

Abstract

This special issue on “Machine Learning, Generative AI, and Trading” explores how cutting-edge digital technologies are transforming financial markets. The featured papers identify novel predictors, from cryptocurrency order flow to granular environmental data, that often outperform traditional factors. They introduce adaptive methodologies like meta-learning for regime shifts, apply large language models to textual analysis, and identify the critical value of large language models and unstructured data. We offer some thoughts for future research directions, including the need for economic interpretation of machine-discovered patterns and the regulations on algorithms.