In the last decade, two major game-changing events have happened in the stock market. First, the introduction of discount brokerage, and second, the launch of AI-based stock trading.
Artificial intelligence technology is not new; it has been around for a while and used in different areas. It took some time for experts to figure out that AI can change the stock trading game, but since the world has known the power of AI in investing, we have seen new disruptive platforms every year. Today, we will discuss how AI-based stock trading apps help investors and traders maximize their profits.
What is AI trading?
AI trading refers to the use of AI, machine learning, and predictive analytics to analyze the historical market and stock data, build portfolios, get investment ideas, and automatically sell and buy stocks. It uses machine learning and complex algorithms to analyze millions of data points and execute trades at an optimal price.
How do AI tools maximize profits for investors?
Now that you have some understanding of AI trading, let us see how it can help traders maximize their profits:
Improve accuracy and reduce research: It is a well-known fact that traders cannot make profits in every trade. Even the best traders have a success rate of less than 50%. There are two ways to increase profitability. First, they can try to execute more trades, and second, they can increase the success percentage.
Before executing a trade, traders need to do a lot of analysis. Therefore, if everything is manual, too many trade execution is not possible.
Traders can improve the success ratio to an extent, but they need to improve their game significantly. AI-based tools improve accuracy, reduce research efforts for traders, and help with both points.
Pattern recognition: Sentiment analysis is a process through which text and linguistics are gathered using Natural Language Processing (NLP) to identify patterns within subjective material. An AI trading platform gathers information from social media and other sources to determine market direction. Once you can know the market direction with higher accuracy, you automatically maximize profits for investors.
Lower costs: To learn to trade (or invest), you have to invest in expensive courses. Also, you need to spend time learning and mastering the strategies - investing your time can be translated into your initial cost. With AI tools, investors don't need to invest in anything for learning and don't need to master anything. Therefore, investors can start trading in the stock market without worrying too much about the cost.
Minimize emotions: If you have ever placed a trade, you can understand this point well. Once the trade is live, your mind and emotions are no longer in your control. Even before placing a trade, your decisions can be biased. With AI tools, your decisions are based on logic rather than emotions.
How to get started with AI-based stock trading?
If the above information has fascinated you, you may be thinking of getting started with AI trading. Before you proceed, you need to understand that any AI-based tool will not do the job for you, just like any stock advisory company cannot create wealth for you.
Therefore, you must spend time evaluating all the tools available in the market. Check their past performance, customer reviews, and ease of use. Once you pick the right tool, the journey ahead becomes super easy - for trading and investing.
Conclusion
More and more people want to trade, but one of the challenges is that it is time-consuming. It is practically impossible to give the required time to the market if you have a full-time job.
You don't have to worry about anything else when you have AI-based tools in your smartphone. Even with a little time investment, you can become a successful trader and investor.
