Looking to Predict Market Trends? How to Use AI to Figure Them Out

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laptop with bar graph to predict market trends

The first stock exchange was created in Europe during the 17th century, and traders have yearned for a tool that helps them predict market trends and fluctuations since then. Finally, more than 400 years after the foundation of the Amsterdam Stock Exchange, artificial intelligence (AI) may be making this dream a reality.  

Here are 5 roles that AI plays in predicting marketing fluctuations.  

Stock market data analysis tools have been available for decades at this point, so the concept of trusting technology to hack the market is nothing new.  

However, these tools are now turbo-charged with AI technology that can complete thorough market analyses faster than ever before.  

What’s more, AI doesn’t only work faster, but it also takes into consideration a wide range of variables that can impact the growth of stock markets during the analysis.  

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2. Enhanced Trading Automation and Portfolio Management

With 2 out of the world’s 3 largest stock exchange markets located in the US, it’s no surprise that most Americans invest in stocks. Today, around 62% of people in the US invest in stocks and this is not far from the all-time high of 65%, so keeping a close eye on recent market changes is as important as ever.  

The good news is that AI is already present in a wide range of trading automation and portfolio management solutions. These can be used to manage stocks across different markets or determine if consolidating your portfolio in one would be more beneficial.  

3. More Accurate Fraud Detection and Risk Management

Even with a huge security and anti-fraud system in place, it’s still possible to fall victim to an investment scam.  

Fortunately, AI can flag stocks that have a high chance of being scams, improve your risk management and assessments, and ultimately help you make a more informed decision.  

One of the most promising uses of AI in the stock market is the creation of tailored strategies. There are many platforms today that can create a tailored strategy for trading stocks using AI, but it’s important to note that these plans should be heavily reviewed before you implement them.  

While there is a huge amount of potential, artificial intelligence is still regarded as a way to boost the tools you use, so avoid trusting an AI tool blindly. 

Is It Too Late to Start Investing?

The stock exchange manages more than $30 trillion in assets, but it’s estimated to grow at a 10% clip each year. Therefore, it’s not too late to start investing — new projects and accompanying stock enter the US markets every single day, so you can start researching and learning how to trade today.  

If you’re not located in the US, it’s a good idea to use a US IP address as this will help tailor your search and show you results pages mostly from the United States. This allows you to easily access vital information that may have otherwise been buried under your local search results.  

Challenges Around Using AI to Predict the Stock Market

There is no denying that AI is already influencing market predictions, and we’re just scratching the surface of its potential. But, it’s important to note the many challenges that need to be resolved before we experience the full impact that this technology will undoubtedly have.  

Let’s take a closer look.  

  • Security and Privacy: It’s necessary to ensure top-notch data security across the board for AI to be confidently adopted by most stock market investors. 
  • Algorithm Bias: An AI model will only be as unbiased as the data it receives. In other words, ensuring data integrity before it’s used to train the AI is paramount.  
  • Market Unpredictability: Geopolitical, extreme weather, and other events can disrupt the stock market, and AI may not be able to gauge this possibility or react quickly enough to replace human involvement.  

Making Smart Investments that Boost Your Portfolio

ChatGPT and other AI platforms are already changing the way stocks are traded in the biggest exchanges.  

From better data analysis to improved portfolio management, tailored strategies, and turbo-charged trading techniques, AI has the potential to catapult your earnings and predict market trends. It can help stock markets around the world grow beyond their usual yearly 10%. 

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