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Using AI to Trade Stocks and Revolutionize Investment Strategies
AI is growing in popularity, and now investors are looking at using AI tools to assist their trading endeavors
Published May 16, 2024.
AI trading is an emerging concept in the stock market, where one uses artificial intelligence to help them make more informed decisions about trading strategies. This technology has brought forth a new wave of possibilities for investors, providing them with insights into the markets. AI is capable of analyzing much more data than humans can in the same amount of time, making it better at spotting potential trends.
Note: Fortrade offers the ability to trade the price changes of instruments with CFDs and NOT to buy/sell ownership of the instrument itself. Additionally, the resources and tools listed in this blog are purely educational and are not meant to be considered as advice.
How to Use AI for Stock Trading
AI can be used to develop trading strategies by analyzing large amounts of data and identifying market patterns, such as potential upward trends. Additionally, AI algorithms could perform fundamental market analysis, such as examining financial statements and evaluating a particular company’s performance over time.
Moreover, sentiment analysis is another field where AI could potentially benefit. By analyzing social media posts related to specific companies, investors could gain valuable insight into people’s opinions of the company. Lastly, technical analysis is where AI can help traders identify potential entry and exit points on a chart.
AI should never replace your trading strategy. Instead, AI could be leveraged to gain better insights into the market that you might otherwise miss. AI should be one aspect of a greater overall plan.
» Discover more about trading with Fortrade
Examples of AI Tools for Stock Trading
To find the most suitable AI trading tool for your plan, it's essential to consider various factors such as:
- Pricing
- Features
- Customer support
- Security measures
- User interface
1. Trading Central
Trading Central, now on Android, iOS, web, and desktop, is a real-time research powerhouse. Backed by AI analytics and analysts, it offers comprehensive technical analysis, charts, and indicators covering:
- Fundamentals
- Technicals
- News
- Sentiment
- Economics
Integrate Trading Central with Fortrade for sharper, faster trading decisions. Accessible in the platform’s chart section, it's user-friendly and constantly updated with advanced tools.
Pricing
Here's the kicker: it's free!
2. TradeIdeas
TradeIdeas is one of the most popular AI trading platforms and caters to investors of all levels. Beginners can open a practice account to learn through simulated trading, while intermediate traders can leverage prebuilt AI trading management strategies. Of course, experts can fully customize their trade strategies and then utilize AI to refine them.
Moreover, TradeIdeas also offers "full quote windows", providing comprehensive fundamental data on stocks, and "custom layouts" that allow users to tailor their channels or choose from preconfigured layouts.
Pricing
- Premium Package: $167/month
- Standard Package: $84/month
» Want to practice trading without the risk of losing money? Consider practicing with a demo account
» Looking for help? Check out our video tutorials
Limitations of Using AI for Stock Trading
AI trading software is a powerful tool that can be used to analyze markets and identify trends, such as the typical factors that determine the price of stocks. However, it still cannot replace the experience of a skilled investor or trader who knows how to interpret these patterns and make the best decisions for their trading account. AI algorithms are complex and expensive, requiring considerable investments in both time and money. Moreover, technology can also be unreliable, with unpredictable results due to unstable market conditions or other factors beyond its control.
Hybrid Approach
AI trading software cannot factor in human emotions such as fear, greed, panic, or FOMO, known as trading psychology, which may influence investors’ decision-making on certain occasions. Ultimately, any investor should combine automated AI tools with their own analysis and judgment when making stock trading decisions.
» Discover how to use an economic calendar to enhance your trading
The Future of AI in Stock Trading
Enhanced automation, improved accuracy, and increased speed of trades are just some of the potential benefits associated with AI-driven investments. As such, it is expected that more investors will turn to this technology for their investing needs in the future.
Furthermore, AI algorithms have already begun to assist traders not only in making decisions but also in automating specific tasks such as portfolio management and trade execution, which could lead to further reductions in operational costs. So, it is pretty likely that these developments will fuel greater adoption and expansion of the use of AI within stock trading over the coming years.
» Need an alternative to traditional stock trading? Learn the fundamentals of CFD stock trading
