AI Trading: What it is and How to Use AI for Trading

Artificial intelligence is the talk of the town. From Silicon Valley tech bosses to your average Joe next door, everyone is talking about the future of artificial intelligence or artificial intelligence’s future. Whether to celebrate AI or express concerns about its power to replace human capabilities and jobs, AI remains a hot topic among different sectors, including that of معاملات آنلاین.

Artificial intelligence is indeed changing how today’s traders view trading and what they can do with it. With the use of advanced algorithms and machine learning to analyse market data, identify patterns, and execute trades, AI systems can remove the emotional side of human trading and perform actions that are faster and more effective. Let’s see how AI works in trading, what are the potential pros and cons in using it when trading and how traders can start exploring it efficiently.

Overhyped or a useful tool?

These days, traders can use AI when trading the stock markets, forex, or cryptocurrencies in the form of AI bots or custom-made machine-learning models. In AI trading, computer programs execute trades whereas in traditional trading, where humans are involved, charts are read and decisions made manually by humans.

Removing the human factor, AI trading uses data and reports to analyse data and identify market patterns and provide insights and trading ideas that traders can use to improve their strategies and trade.

But AI can also refer to the full automation of trading. While it can offer many useful features, traders should also monitor them to control unpredictable market conditions or possible technical failures.

Why do traders choose AI systems?

A wide variety of AI trading tools are available to traders who want to understand and analyse the بازارهای مالی, use data to speculate on price changes, organise trades, and monitor the markets. The idea that trades can be automatically executed using live data is very convenient for traders and is one of the reasons AI tools are preferred.

Trades executed within milliseconds is also an attractive feature of AI systems as forex and CFD trading is predicated on speed and precision. This is why AI’s accuracy and elimination of human errors as well as its ability to learn and improve by analysing new information make it a great tool in the hands of traders.

How does AI work?

AI trading collects data from various sources available online which then processes to get an overview of the market. Machine learning helps AI systems to analyse historical data and detect trends, identify price movements, changes in momentum and more with greater precision than human traders.

When AI detects a trading opportunity it can then execute buy or sell orders in a fully automated, quick and efficient manner. AI systems can also include risk management such as stop-loss and take-profit orders to help traders manage risk.

The wide range of AI trading systems

To make it more palatable to those who have never used Artificial Intelligence systems, there are a variety of AI tools and systems that can be used by traders to perform different actions.

Trading systems

Quantitative trading

Quant trading uses quantitative modelling analysis of the price and volume of an asset to determine the best trading opportunities.

Algorithmic trading

Algo-trading uses algorithms to determine market trends and help traders make trading decisions.

High-frequency trading

High-frequency trading involves reading several markets and performing millions of trades in a few seconds.

Arbitrage trading

Traders can buy a particular asset from one market and sell at a higher price in another market with the help of AI trading tools which can quickly identify different price values of the same instrument across different markets.

AI trading tools

Portfolio Managers

These AI tools can add assets to an existing portfolio and then manage it, increasing and/or decreasing them as needed.

Trading robots

These computer algorithms can trade based on a set of guidelines.

Indicators

AI indicators can send a notification when a currency pair meets certain conditions. The trader then has the freedom to act if they deem it appropriate.

Strategy builders

These AI assistants can be trained by traders to act based on specified criteria. They can also help traders automatically correct their trading algorithms before executing a trade.

AI trading techniques

AI can also help traders in other aspects of trading such as research and analysis. 

Data mining

Data mining involves organising large sets of data and analyse it, helping traders make better trading decisions.

Sentiment analysis

Sentiment analysis can include various types of online information.
This may come from forums, news sites, or social media. It helps traders better identify market sentiment and trade more effectively.

AI pros:

• Reduce research time
• Improve precision
• Predict trends
• Lower costs
• Reduce human errors

AI cons:

Lack of transparency and regulation

While AI trading technologies can handle multiple calculations and perform actions in seconds, surpassing human capabilities, AI critics have voiced concerns about the ethical use of such tools and their regulation.

The subject of AI regulation is currently discussed in the news as Republicans in the US want to stop the regulation of AI in several states.

Part of President Donald Trump’s “one big, beautiful” agenda bill includes a new rule on artificial intelligence. This rule states that, for 10 years, states should not be able to impose any law or regulation on AI models, systems, or automated decision systems.

100 organisations have raised alarms about this rule and wrote in a letter they sent on 19 May to members of Congress: “This moratorium would mean that even if a company deliberately designs an algorithm that causes foreseeable harm — regardless of how intentional or egregious the misconduct or how devastating the consequences — the company making or using that bad tech would be unaccountable to lawmakers and the public.”  

The Trump administration is pushing back against excessive regulation of the AI sector. However, there are legitimate concerns about the effects of unfinished and unaccountable AI. Tech companies also need clarity about which rules apply and where those rules stop.

In Europe, the AI Act which includes rules for generative models will apply from August 2025. It classifies AI applications into risk levels and defines rigorous requirements for areas that are considered higher risk. Further lower-level FS guidance from the European Supervisory Authorities (ESAs) explains how existing sectorial legislation should be understood in the context of AI. The EU has a €200 billion InvestAI strategy to fuel growth in this area.

Overreliance on data & mistakes

Using historical data is not always accurate while speed can allow for errors to happen.

Cybersecurity

Using AI trading tools comes with the increased risk of cyberattacks and data breaches, which could reveal traders’ private data. Make sure you are always informed about the tools you are using and understand the limitations of the systems so you can fix potential flaws.

Summary

AI tools and systems can help you enjoy a smooth trading experience, but they also come with risks. Always monitor and review decisions performed by AI, diversify your strategies and combine tools with more traditional strategies and human judgment. Perform regular updates and audits of the systems and ensure that your AI systems operate within ethical boundaries and regulatory frameworks such as fairness, transparency and protection of private data.

سلب مسئولیت: This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.