Yahoo Finance These AI Tools Claim To Help You Make Money Trading Stocks — Can They?
The surge of artificial intelligence (AI) is having many ramifications on the way we work, live and create. And now, AI models are also impacting the way we trade. Some AI tools and platforms can enable investors to trade in a faster, more efficient way, aiming to help you be better at it — and to help you make more money, faster.
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Yet, not all AI tools are created equal.
“It’s important to remember, when you’re choosing AI tools to trade stocks, AI is a tool and resource. It’s not a crystal ball,” said Brian Prince, CEO of TopAITools.com. “As with using AI for any number of processes — from finding the best, low-cost dinner recipes to managing your calendar — it will only be as good as the user and the prompts you feed it.”
Prince further noted that AI tools for stock trading fall into a variety of buckets. These include robo-advisors, which use AI algorithms to manage your portfolio, stock screeners and analysis tools that can make recommendations, as well as stock trading platforms which incorporate AI for research and alerts.
He also noted that AI-powered stock trading platforms exist for investors at every level, and recommended looking for platforms that transparently share information about their AI methodologies, while also providing case studies or evidence of their system’s performance. Platforms that offer robust user support and educational resources are also preferable to alternatives.
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Hoops AI, Option Alpha, Wealthfront
According to Prince, some of the most useful tools to help trade include platforms such as Hoops AI, Option Alpha and Wealthfront, with each platform serving different purposes and appealing to different types of investors.
Option Alpha
Experienced traders like Option Alpha because it takes the emotion out of trading by using bots to monitor your positions and make recommendations, said Prince. He added that you can do also backtesting to make better investment choices.
Regarding Option Alpha, Prince said it “epitomizes the beauty of AI.”
“It’s not perfect, but it can analyze vast amounts of data quickly, leaving emotion out of the equation, to guide people toward better investment choices,” he noted.
Hoops AI
In addition, he also suggested Hoops AI, a free platform for AI-powered trading insights. Hoops AI offers an intuitive interface that allows you to compare and analyze stocks while placing specific investments on customized watchlists.
“There’s one caveat — you can’t invest through Hoops AI, so you’ll still need an investment account to buy and sell stocks,” he said. For a beginner to intermediate trader who knows how to analyze stock performance and the meaning behind the numbers, Hoops AI gathers all the information in an easy-to-absorb way and lets you compare multiple stocks at a glance.
Wealthfront
Finally, Wealthfront is another AI-powered fintech tool that has been on his radar.
“Wealthfront has been using AI for its robo-advising long before other companies. This enables low fees and pro-level investment guidance without using advisors,” he added.
Are AI Tools Any Good For Stock Trading?
“As with any technology designed to streamline your workflow or make elements of life easier or convenient, trading apps are worth the money if they can save you time and help you earn money,” said Prince, stressing that AI can provide powerful tools for market analysis, but no system guarantees success.
“It’s crucial to use these tools as part of a well-considered investment strategy, and to speak to professional, human financial advisors when necessary — or if you feel you need extra guidance,” he added.
On the other hand, some experts remain dubious as to the tools’ usefulness and accuracy.
For instance, Phil Siegel, founder of AI non-profit organization CAPTRS, said he is dubious about any AI tool being useful for specific investment recommendations.
According to him, the models tend to be trained on older data and can’t adjust to current pricing and information.
“If the AI is more oriented toward trading strategies than specific trades that could be more interesting, but frankly hedge funds will tend toward more sophistication in those models,” he said. “In any case, I would look very hesitantly at a tool claiming to be AI and focused on stock trading.”
Vijay Marolia, co-founder of The Cash Square, echoed Seigel’s sentiments, noting that it seems there is a new AI-powered trading tool coming out every week, each claiming to help people make unlimited gains.
“The problem is that most, if not all of them, are basically trend-following algorithms that are using limited amounts of data — mostly data from the last few decades — a time when artificially low interest rates have had an outsized impact on markets,” said Marolia. “As with any chart-based pattern trading strategies, the trend is your friend until it’s not.”
He added, however, that he sees AI’s utility in its data-gathering capability.
“Whether it’s related to fundamentals like supply and demand via traffic signals or satellite images, or whether it’s using AI to screen for legislation or lawsuits, or whether it’s used to test for spikes in investor sentiment… I think the data gathering will be more helpful over the long term,” he concluded.
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