AI-Derived Technical Analysis in Stock Trading

Artificial intelligence stocks trading is becoming increasingly popular, which is understandable. Such technologies offer many beneficial features for investors and are worth considering by the market players. So, let’s review them in detail.

How Can Artificial Intelligence Help a Trader?

AI-based bots significantly speed up data analysis. This feature allows investors to build clear and correct strategies for working in the financial markets. The main functions of AI trading include the following:

1. Market sentiment analysis. For this purpose, algorithms use a lot of different factors, such as news, consumer activity on the Internet, macroeconomic data, interest rates, geopolitical issues, etc.
2. Personalized advice. AI-based bots can consult traders on what exactly is missing in their investment portfolio so that they can maximize profits. The traders receive a consultation in real time.
3. Processing large amounts of data. Artificial intelligence can represent information in several ways. The most convenient and easy-to-analyze formats are graphs and charts.
4. Automatic trading. Bots can carry out automatic trading.
5. Optimal investment portfolio diversification. A large amount of processed information facilitates this process. Balancing factors such as growth, income, and risks is important.
6. Analysis of historical market data to minimize risks. For this purpose, bots analyze price changes over a certain time, thus predicting the future market situation. At the same time, older data has less influence on the analysis results.
7. Future stock price prediction. Based on the identified market patterns, artificial intelligence bots can determine future stock prices. However, there is no universal formula for all cases. Many factors influence financial markets, and sometimes, these factors are quite unpredictable. Nevertheless, there are certain trends that AI can use in forecasting.
8. Information division. Algorithms can memorize new data and forget unnecessary information.
9. Data classification. Artificial intelligence trading programs can classify financial market data, making it easier for investors to process information.

Advantages of AI Trading

The use of algorithms in financial markets brings many benefits to investors. The main advantages of trading with AI-based bots are the following:

• increased efficiency of concluded transactions;
• absence of errors caused by the human factor;
• trading at high speeds;
• risk management;
• opportunities to gain an advantage in the stock market;
• ease of using of trading instruments.

How Do AI-Based Bots Work?

Artificial intelligence continues to improve with the help of machine learning. Some models that predict stock prices have the following components:

• support vector machines (SVMs);
• long short-term memory (LSTM) networks;
• random forests;
• ensemble learning;
• gradient boosting machines (GBMs).

Today, the reasonability of using AI-based bots in financial markets operations is no longer a question. Traders around the world recognized their advantages. If you still don’t use these tools in your work, your competitors will do so. Artificial intelligence use in trading allows investors to significantly improve their performance. Of course, this technology cannot replace a trader, but it can greatly facilitate their work. Algorithms are especially useful for inexperienced investors who need professional assistance in managing their assets.