Artificial intelligence (AI) tools are changing how we go about day trading, offering traders price predictions and even automated trading strategies. If you’re curious about how AI for day trading works and how you can use it to improve your performance, this guide will walk you through everything you need to know.
What is day trading?
Day trading implies buying and selling stocks or cryptocurrencies within a single trading day. The goal is to profit from small price movements by executing multiple trades throughout the day. Day traders typically use technical analysis, chart patterns, and market trends to make quick decisions, all of which can benefit from using AI tools.
How to use AI for day trading?
AI for day trading uses machine learning, natural language processing, and data analysis to predict stock price movements, identify profitable trades, and execute trades automatically. And unlike traditional strategies that rely on human intuition or static algorithms, AI adapts to market conditions in real-time.
When it comes to actual advantages and reasons why day traders use AI tools, two of the most important ones include:
- Data processing at scale: AI can analyze vast amounts of financial data in seconds, helping traders identify patterns and trends;
- Real-time adaptation: AI tools adjust their stock market predictions based on live market conditions.
With this in mind, here’s how AI day trading compares to traditional day trading:
| Feature | AI trading | Traditional trading |
| Speed | Processes data in milliseconds | Relies on manual analysis |
| Emotional control | Emotion-free decisions | Prone to emotional trading |
| Adaptability | Adapts to market changes | Limited to pre-set strategies |
| Data analysis | Analyzes massive datasets | Limited by human capacity |
Day trading with AI: Step-by-step process
The thought of using AI for day trading might sound complicated; however, it’s way simpler than you might imagine. That said, here’s how you can get started:
Step 1: Choose a platform
As there are various AI tools for day traders out there, the first step is to choose the one that suits your needs the best. For example, if you’re looking for reliable price prediction, we recommend using the Finbold AI Price Prediction tool, as it offers five different AI models and is pretty easy to use, due to its simple and user-friendly design.
Step 2: Register an account
If you decide to opt for the Finbold AI Price Prediction tool, all you have to do to get started is register an account with Finbold. By doing so, you get to use the prediction tool three times free of charge, which can help you familiarize yourself with the platform. On the other hand, if you subscribe to Finbold Plus or Finbold Pro, you get unlimited predictions.
Step 3: Set up the parameters
After you register an account with Finbold, you’ll be able to use the AI Price Prediction tool. To do so, tap on the AI Price Prediction tab (located between Dashboard and Signals), and you’ll be greeted with adjustable parameters.
First off, you should search for the stock or crypto that you’re interested in. Once you do that, continue by adjusting the timeframe for which you want the AI to predict the price. You can choose between 1 day, 3 days, 7 days, 30 days, and 60 days.
With the stock/crypto and timeframe in place, pick the AI model and prompt version for the prediction. For models, you can choose GPT-4o and 4o Mini, Claude 3.5 Sonnet and 3 Opus, Grok 2 Vision, DeepSeek Chat and Gemini 1.5 Flash 002.
You also have choice between 3 prompt versions:
- v0.1 Technical analysis model: Using indicators and macro factors to generate daily price targets with explanations;
- v0.1.1 Technical analysis-based price prediction model: Generates daily price targets with reasoning for any market instrument;
- v0.1.2 Simplified price prediction model: returns only JSON output with price target and brief reasoning.
Finally, simply tap the Predict Price button and wait a few seconds for the AI to do its job. After it’s done, you’ll get a notification in the upper right corner of your screen saying the prediction is done, and you’ll be able to focus on the results.
Step 4: Analyze the results
After the AI generates its prediction, it will provide you with a detailed explanation of why the selected stock or cryptocurrency is expected to rise or fall. If you’ve selected multiple AI models, you’ll also see varying predictions for comparison.
Common mistakes to avoid when using AI for day trading
When using AI for day trading, it’s important to avoid common mistakes that can undermine your success. Here are key pitfalls to watch out for:
- Relying solely on AI predictions: AI tools provide valuable insights, but they are not foolproof. Hence, AI predictions should be combined with your own analysis and market research to make informed decisions;
- Ignoring risk management: Even the most accurate AI tools can’t guarantee profits. Failing to set stop-loss orders, allocate capital wisely, or manage your risk exposure can lead to significant losses;
- Overtrading based on AI signals: Some traders fall into the trap of overtrading, executing numerous trades based on every AI signal;
- Overlooking model differences: Many AI tools offer multiple prediction models, each tailored to different market scenarios. Take the time to learn which model best fits your trading style and market conditions.
The bottom line
Finally, we must conclude with a reminder that AI for day trading or investing, in general, is not a get-rich-quick scheme. It’s simply a tool that can potentially help traders make better decisions. As such, start with tools like Finbold AI Price Prediction, and take small, calculated steps to familiarize yourself with AI trading.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs on how to use AI for day trading
What is AI for day trading?
AI for day trading involves using artificial intelligence tools and algorithms to analyze market data, predict price movements, and execute trades. These tools help traders make faster and more informed decisions by processing vast amounts of information in real-time.
How do AI price prediction tools work?
AI price prediction tools use machine learning models to analyze historical and real-time market data, identifying patterns and trends to forecast future price movements.
Do AI stock price prediction tools guarantee profits?
No, AI tools cannot guarantee profits as markets are influenced by numerous unpredictable factors. They are designed to improve your decision-making and identify opportunities, but successful trading always involves risk.
Can AI stock price prediction tools predict every market movement?
No, while AI tools excel at analyzing data and identifying patterns, they cannot predict every market movement, especially those driven by unexpected news or events.
How to use an AI stock price prediction tool for day trading?
Start by selecting a reliable tool like Finbold AI Price Prediction, create an account, and test the tool with three free-of-charge predictions by choosing the stock/crypto, timeframe, AI model, and prompt version.
