The ongoing rise in popularity of artificial intelligence has also left its trace on investing. AI investing tools can analyze vast quantities of information and provide investors with clear indicators about the market, therefore making the investing process potentially much more efficient. This guide will take a look at smart investing software and answer whether you can make money with AI trading.
How is AI used in trading?
About AI
Using machine learning and neural networks, AI can process enormous amounts of data and recognize recurring patterns that can potentially indicate ongoing and future market trends. As such, AI trading can benefit from invaluable insights about price movements and potential investing risks.
Additionally, AI excels at automation and autonomous decision-making. When properly used, AI tools can significantly reduce the time and effort spent on investing, as well as execute transactions in a fraction of the time it takes humans to read the numbers on their screens.
In short, AI trading can reshape investing by allowing you to plan better strategies, earn increased returns, and boost your decision-making.
Here are some specific uses for AI trading:
- Price prediction. AI’s predictive capabilities stem from its analysis of market-related data. By recognizing patterns in financial data, social media, and news outlets, AI can forecast specific trends and customer behaviors;
- Gauging risk. Similarly, AI’s pattern-seeking abilities can spot irregularities and detect potential risks, market volatility, and fraud;
- Portfolio management. Information on real-time market trends allows AI tools to automate portfolio management based on personal preferences (like risk tolerance, time, and investment approach) and the current market context.
How to use AI tools for price prediction
The most common use of AI for trading is AI price prediction tools, which are simple to use and provide straightforward trading directions based on market data analysis.
Just define the software inputs, which can be any currently popular stocks or cryptocurrencies, and specify a timeframe (1 day, 7 days, 15 days, 30 days, and 60 days).
FInbold’s tool also allows for additional customization of parameters by opting between various AI models and prompt versions.
Afterward, press the “Predict Price” button and wait for the tool to process the data. The process takes seconds and provides predictions and insights based on the selected models.
Specific uses of AI trading
These price prediction tools can be used by all investors, including those in stock trading, crypto trading, and day trading.
Stock price prediction
Using AI for stock price prediction is perhaps its most frequent use. It refers to using AI tools to analyze historical data and outline stock market trends and specific indicators, which allows AI to forecast stock prices.
With these tools, investors can make better decisions and reduce the overall risk when trading stocks. Furthermore, they can be used by everyone, from day traders and beginners to institutional investors looking to maximize gains and minimize risks.
Crypto trading
The cryptocurrency market is open 24/7 and highly volatile, with price swings happening constantly. Therefore, AI tools see plenty of use in terms of automation and autonomous decision-making to cut losses or capitalize on any cryptocurrency price swing.
Once again, the best use for AI crypto trading tools is in price prediction. With proper insights into the market sentiment and trading volume of a digital token, crypto traders face less risk and can potentially earn more from each trade.
Day trading
Day trading benefits from machine learning by accessing real-time market analyses, including chart patterns and technical indicators. Additionally, when AI makes transactions, it does so much faster than human traders, and in day trading, doing things faster potentially earns more money.
AI tools also learn over time and adapt to the changing market. This constant evolution allows artificial intelligence to deliver more relevant information, which leads to more informed and successful trading decisions.
Overall, in all these uses, AI outperforms humans in the following areas:
- Speed: AI trading tools perform in a fraction of the time that humans require;
- Accuracy: AI can identify patterns more reliably;
- Lack of emotions: Artificial intelligence is immune to emotions;
- 24/7 monitoring: Unlike humans, AI can monitor and react to new developments around the clock.
- Scalability. AI trading tools can execute more trades simultaneously, which can make the difference between profit and loss.
Can you make money with AI trading?
Finally, the billion-dollar question: can you make money by relying on AI trading?
The short and oversimplified answer is yes, you can. The long and accurate answer is a bit more complex.
A study has shown that AI outperforms 54.5% of human investors. However, it is far from infallible and cannot predict the future. When compared, AI tools are better at data processing and identifying patterns, while humans make better decisions in most contextualized situations.
The bottom line
Large institutional investors have been successfully relying on AI trading for years, and institutional investing represents the vast majority (about 90%) of the current stock trading volume.
They also adhere to the philosophy of human-AI trading synergy. Why should retail investors remain out of the loop? If you are considering using an AI price prediction tool, we recommend the Finbold AI Price Prediction tool, which is equipped with multiple AI models and designed with a user-friendly interface.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs
Can I use AI for trading?
Yes, AI can help in trading as it can analyze vast amounts of data and produce insights and predictions that can potentially increase your returns and minimize risks.
Can I make money with AI trading?
Yes, you can make money with AI trading. However, you should not blindly follow AI’s decisions, and you must always back up your investing decisions with your own research.
How does AI help with trading?
Traders can use AI to craft better strategies, improve their decision-making, and earn better returns on average.
Can AI make reliable market predictions?
AI tools excel at analyzing data and spotting patterns that can make accurate guesses about the upcoming market trends. That said, no AI tool is 100% correct, as the market is far too complex and unpredictable.
