What is AI Trading

Artificial intelligence (AI) is a new technology that has yet to fully realize its potential. In reality, the possibilities of what AI will be able to accomplish in the future are nearly limitless. Despite this, AI continues to play a significant role in several critical industries. Whether it’s Facebook offering content based on your previous searches or Amazon recommending things based on previous purchases, AI can surpass the human brain by a long shot.

If you’re interested in learning more about what AI trading is, how it works, and which platforms allow you to purchase and sell assets autonomously, Continue reading this article.

Artificial Intelligence Trading

The phrase ‘AI Trading’ is a bit of a misnomer, because it can refer to a variety of automated trading methods. In its most basic form, AI trading refers to the purchase and sale of assets without the involvement of a person. Instead, the underlying software will make trades on your behalf, based on the parameters you’ve set.

For those who are unfamiliar with AI, the overall premise is that it can assess millions of possible scenarios in a fraction of a second. It achieves it by analyzing massive amounts of previous data before making a conclusion based on the information at hand. Despite having access to some of the most advanced AI trading robots, huge financial institutions keep the underlying software under lock and key at all times. This ensures that their “Secret Sauce” does not fall into the wrong hands. As a result, retail traders do not have the same amount of access to AI trading algorithms as institutional traders.

With that said, there are a variety of online platforms that allow you to trade automatically. While not as sophisticated as the AI bots used by financial institutions, they at the very least allow you to trade automatically, eliminating the need to manually buy and sell assets.

The Advantages

  • Artificial intelligence (AI) has the potential to outperform the human brain.
  • There is no reliance on human emotion or intuition.
  • Trade 24 hours a day, 7 days a week — AI never gets tired.
  • It has the ability to trade in different markets at the same time.
  • Trade full-time and on your own terms.

The Negatives

  • The underlying algorithm is only as good as the AI trading program.
  • To set up your trading parameters, you’ll need to do some manual work.

How Does Artificial Intelligence Trading Work?

Let’s look at how AI trading works now that you have a better understanding of what it is. In a word, AI trading is based on a pre-defined algorithm that is capable of placing trades on its own – with judgments based on past data. Financial institutions, as we briefly said in the last section, have some of the most advanced AI trading bots in the industry, and hence frequently outperform the markets.

However, in the retail trading world, you won’t find a robot as capable as those found in the institutional world. Instead, you’ll be buying a pre-designed software-based trading algorithm. The underlying software will be built on a ‘what-if’ basis, which means that it will execute trades only if specific circumstances are met.

Benefits of Artificial Intelligence Trading

So now that you know what AI trading is and how the underlying software might work in practice, let’s have a look at some of the most common AI trading cases.

Infinite Data Analysis

The capacity to conduct a limitless amount of data study is one of the most noticeable advantages of utilizing an AI trading robot. If you’re a seasoned trader, you already know how crucial technical analysis is when it comes to online trading. You wouldn’t have the tools you need to consistently place good trades if you didn’t have them.

This is advantageous since it allows you to specialize in a specific asset class rather than trying to be a “Jack of All Trades.” However, you will most likely miss out on a plethora of prospective trading chances as a result of this.

Never Stop Buying and Selling

There is only so much time you can commit to your trading pursuits, whether you are a novice trader or a seasoned investor with years of experience. This includes not just the data collection step, but also the actual trade placement process. Those that try to burn the engine will eventually discover that trades are being placed irrationally.

Air traffic controllers, for example, are compelled to take a break after every hour of deployment, not least because the job involves considerable mental and physical concentration. As a result, if you use an AI trading program, you will be able to trade 24 hours a day.

Any Marketplace for Trading

You will only be able to trade a set amount of marketplaces at any given time, which is equivalent to trading fatigue. For example, because of a 14-hour time difference, you won’t be able to trade both the Tokyo Stock Exchange and the NASDAQ.

Trading on the London Stock Exchange and the Australian Securities Exchange follows the same pattern. As a result, you’ll need to trade on markets that are in sync with your local timezone. You can, however, access as many markets as you want by leveraging the skills of an AI trading robot – 24 hours a day, 7 days a week!

Perfect for Beginners and Advanced Traders

Both rookie traders and seasoned investors can benefit from AI trading bots. In terms of the former, the underlying software enables you to trade on the financial markets without any prior knowledge. Instead, you’ll give your AI trading bot permission to buy and sell assets on its own.

When it comes to experienced investors, AI trading algorithms can help you take your online trading to the next level. You’ll have access to a much larger historical data set, the ability to trade for as long as you like, and an infinite number of markets.

Risks of AI Trading


While the advantages listed in the preceding section make robots an appealing proposition, you must also examine some of the risks. After all, if AI trading were that simple, wouldn’t we all be doing it to ensure endless profits? Unfortunately, AI trading is not a completely risk-free occurrence, so be aware of the following dangers.

1. Only as Good as the Underlying Software

As we’ve discussed throughout this article, robots are only as good as the software they run on. Don’t forget that the software must be manually designed, built, and trained to operate in the open market. As a result, if the AI trading bot isn’t well-designed, the software is likely to lose money for you.

2. Providers of shady AI trading

If you Google the phrase “best AI trading platforms,” you’ll find thousands of companies promising assured returns. These AI suppliers will make exaggerated claims that are not based on truth. As a result, you must exercise extreme caution before parting with your money.

3. Markets might fluctuate at any time

There is no guarantee that if you are fortunate enough to purchase a successful AI trading bot that has been consistently profitable for months on end, this will continue to be the case. The makeup of the financial markets, on the other hand, can change at any time.

4. Overfitting


This is where algorithms create models with more data than needed. Feed them with too much historical trends, and they might result in trading strategy inflexibility. Back testing, though recommended, might lead to skewed results, creating a bias that a certain strategy will work exactly like you’ve predict it in a real-time market. 


If you’ve read our AI Trading tutorial from beginning to end, you should have a good grasp of how the phenomena work. In a word, using an AI-driven trading algorithm has several advantages, including the capacity to trade 24 hours a day, access numerous markets, evaluate large data sets, and trade without emotion.