Artificial intelligence is the ability of machines that are programmed to mimic or replicate human behaviour and human intelligence based on the data given as input. These “smart machines” can make decisions based on efficient algorithms. The potential of AI is actively explored and continues to make inventions in the field of Computer Science.

This article will demonstrate the following content:

• What is AI Stock Trading?
• How Does AI Stock Trading Work?
• Benefits of AI Stock Trading
• 5 Best AI Stock Trading Bots 2023
• Hidden Risks Involved in AI Trading

What is AI Stock Trading?

Artificial intelligence has demonstrated its remarkable potential in different fields of life. The stock market which lays the foundation of the global economies for centuries is now actively transformed and revolutionized by Artificial intelligence.

Experts around the globe are of similar opinions regarding AI and its impact on Finance. From traditional ways of predicting profits to using AI to invest more wisely, gain more profits and make more informed decisions:

AI stock trading implements the concepts of machine learning combined with the efficient and advanced algorithms and techniques of machine learning. It predicts the pattern of stock trading, makes more informed decisions, and achieves high profits. Furthermore, it automatically buys and sells stocks, minimizes the risk of loss, and understands the trends of the stock market efficiently.

How Does AI Stock Trading Work?

Many companies that offer their services as AI stock traders use various tools and technologies to understand and interpret the trends of the financial market. There is various software available that provide AI stock trading as a built-in feature that can either be free to use or paid.

Below explained is a general concept of how AI contributes to and transforms stock trading:

Data Collection

Data is an asset in Artificial Intelligence, therefore, the first step in AI stock trading is by collecting historical data related to Finance. This data serves as a foundation for predictive analysis and for the model to train and generate valuable insights:

Data Processing

Not every data that we collect is important. We continuously need to filter and transform it to extract meaningful insights. The data we have collected may contain data redundancy, missing values, old and stale data that is of no use, etc:

Extract Features from Collected Data

After data processing comes feature extraction. In this stage, we extract relevant features from our data that are already processed by using various algorithms and techniques. These features may include sentiment score value, earnings, revenue growth, profits, previous patterns of the stock market, etc:

Model Training

Machine learning involves the training of the model for the algorithm to learn and answer based both on data and experience. Therefore, the previously collected, processed, and extracted data will be given as input for model training:

Decision Making

The training of this model will generate meaningful insights into data based on which accurate predictions are made. These predictions help the algorithms to make decisions that ensure better growth and high profits:

Execution and Monitoring

The human or brokerage platform automatically executes recommendations generated by the model before executing trades. The performance and maintenance of the trained AI model are continuously monitored to minimize the risk of any harm. Furthermore, continuous feedback is provided to the model to improve the accuracy and predictions of the model:

Let explore some of the benefits of AI stock trading:

Benefits of AI Stock Trading

Capable of analysing vast amounts of data and generating insights into it, detecting patterns of the stock market, and helping investors to generate high returns. Furthermore, it minimizes the risk of loss, and providing higher accuracy and efficiency for investing strategies.

Some of the advantages of AI stock trading are listed below:

• Less Research time is required.
• Easily scalable.
• Adaptability.
• Continuous learning of algorithms.
• Automate the execution of trades.
• Emotional Neutrality.

5 Best AI Stock Trading Bots 2023

Trending AI Stock Trading Bots are given below:

• Trade Ideas
• TrendSpider
• StockHero
• Tickeron
• Equbot

Hidden Risks Involved in AI Trading

While AI is showcasing its potential in numerous fields of Computer Science, it cannot be overlooked that AI too has its limitations. Considering the fact that AI eliminates emotional biases and makes decisions based on the different results obtained from the data, there is a need for continuous monitoring of the model and careful consideration of the data being input.

Furthermore, even though AI in stock trading can generate potential outputs and providing valuable and meaningful insights to the market, any failure of the algorithm or model being used can result in a disastrous effect on one’s stock. Similarly, the foundations of complex algorithms and their continuous model training over time are crucial for beginners to understand AI stock trading.

Therefore, AI stock trading is not everybody’s cup of tea and requires a far more technical and strong understanding of the financial market by the individual himself too. AI has made stock trading incredibly easy and accessible, but it is important to be aware of the hidden perils by relying solely on AI for stock trading.

Conclusion

AI stock trading is remarkable potential in the stock market by improving current investing strategies, and improved decision-making. Furthermore, it has helped investors to make more informed decisions to generate high returns and take advantage of better trading opportunities. However, it is important to consider that AI has its own limitations, and the need for manual maintenance and monitoring is required.