From Optimization to Autonomy: How AI Transforms Trading Strategies and Financial Market Dynamics

DOI

10.2991/978-94-6239-624-1_19How to use a DOI?

Keywords

Artificial Intelligence (AI); Algorithmic Trading; Portfolio Management; Financial Stability; Reinforcement Learning; Generative AI; Robo-Advisors

Abstract

Algorithmic trading has transformed financial markets by automating execution and optimising portfolio management, but the integration of artificial intelligence (AI) has extended this transformation by enabling autonomous strategy generation, dynamic stress testing, and personalised wealth management. These advances raise critical questions about how AI may reshape not only institutional operations but also the stability of global financial systems. The aim of this study is to examine how AI-driven algorithmic trading and portfolio management influence financial stability, with particular attention to the dual role of enhancing efficiency and introducing systemic risks. A qualitative multiple-case research design is employed, focusing on three cases. The findings show that AI extends analytical capacity by modelling complex correlations and simulating stress scenarios, enhances adaptability in volatile markets, and broadens access to sophisticated portfolio tools for retail investors. However, the results also reveal systemic risks, including strategy convergence, herding behaviour, and challenges of transparency and regulatory oversight. The research offers guidance for asset managers, investment banks, fintech firms, and regulators on balancing innovation with oversight to ensure that AI strengthens rather than destabilises global financial stability.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Binh Minh Tran
AU  - Phan Nguyet Anh Do
AU  - Hoang Anh Nguyen
PY  - 2026
DA  - 2026/04/06
TI  - From Optimization to Autonomy: How AI Transforms Trading Strategies and Financial Market Dynamics
BT  - Proceedings of the International Conference on Sustainable Economics and Finance in the Digital Business Transformation (INCOSEF 2025)
PB  - Atlantis Press
SP  - 266
EP  - 277
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-624-1_19
DO  - 10.2991/978-94-6239-624-1_19
ID  - Tran2026
ER  -