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AI-powered trading: How to use AI for an investment

Updated: Apr 30

The author Jázmin Lászik  of the Article:" AI-powered trading: How to use AI for an investment"

Publication date: 25.09.2023

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Artificial intelligence (AI) has been around humans for decades. Actually, we use AI from the most convenient task to the most challenging. In recent years, traders started to use AI to make investment decisions, creating a huge shift in how investing is conducted.

In this article, we’re going to look at how you can use artificial intelligence in trading. We’ll help you choose between assets, managing your time, creating a strong portfolio and improving your returns. Let’s delve into some specific artificial intelligence tools you could add to your trading habit.

The use of AI to make investment decisions

Using AI in day-to-day trading

1. Algorithmic trading

Artificial Intelligence has brought a significant revolution to algorithmic trading, also known as quantitative trading. This trading method relies on predefined rules and mathematical models for swift and frequent buying and selling.

AI algorithms swiftly analyze market data and assess sentiment from news sources. They consider various factors to make rapid trading decisions.These algorithms excel at identifying and seizing opportunities in the market. They also take advantage of short-term price differences and improve risk management practices.

Trade Ideas uses AI-powered scanners to scan and analyze stock market data in real-time, helping traders identify potential trades. Also, you can set up customizable alerts to get notifications when a certain pattern or condition happens in the market.

2. Sentiment analysis

AI can be used for sentiment analysis as well. The main indicators for market movement are macroeconomic data, earning reports, geopolitical issues, interest rates and market sentiment. Often feelings and biased opinions can move the stock market more than other data.

Brand24 is a comprehensive online monitoring and social listening tool. It’s a tool for monitoring brand reputation, tracking online mentions, and gaining insights from social media and the web.With Brand24, users can monitor discussions, comments, and reviews across various online platforms. They can stay informed about what's being said about their brand, products, or industry in real-time.

3. Data Analysis

Thanks to AI, individuals can now analyze data at an unprecedented speed. AI possesses the capacity to swiftly process huge volumes of data in split-seconds. This enables traders to base their decisions on data-driven insights. Human capabilities alone are insufficient for thoroughly reviewing all available information. This can result in missed opportunities and flawed judgments.

Kavout specializes in using AI and machine learning to provide data-driven insights for investors and financial professionals. In particular, Kavout's platform is designed to help users make more informed investment decisions. It does this by analyzing vast amounts of financial data, news, and market sentiment in real-time. They aim to identify trading opportunities, assess risk, and optimize investment strategies.

How to use AI for investment

AI in trading is a powerful tool

Artificial Intelligence in trading should be seen as a powerful tool to enhance decision-making. It should not be viewed as a replacement for human judgment, creativity, and sentiment.

While AI technology continues to advance, it still requires ongoing updates and improvements. AI excels at processing data, identifying opportunities, and executing trades efficiently, but it lacks human reasoning and intuition.

Successful trading often involves a synergy between human expertise and AI capabilities. AI can provide data-driven insights and support to traders, enhancing decision-making. This ultimately leads to more informed and strategic decisions in the dynamic world of financial markets.

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