Can AI Help You with Intraday Trading?

Artificial intelligence or AI has had a profound impact on several aspects of our lives. Today, it is hard to find any industry where AI has not made its presence felt. The world of financial markets has also caught up. In fact, Intraday trading, which involves buying and selling of securities on the same day, has also not been left behind. AI when combined with classic technical analysis can help with intraday trading.

Benefits of AI in Intraday Trading

• Process and analyse vast amounts of data

A large part of success in intraday trading hinges on your ability to identify market trends and insights with accuracy. AI can help you process and analyse vast amounts of data within a short time, thus allowing you to identify trends. Note that with AI, the impact is far beyond basic data analysis.

AI-driven tools are equipped with complex trading algorithms that can adjust to market changes in real time. This can further help you with trading.

• Ability to capture the impact of geo-political events

Advances in generative AI means that the system can capture the impact of significant geo-political events on stock prices. This is vital because the current global climate is volatile with several countries on the boil. Any escalation on any front can significantly disrupt markets. AI systems can equip you to analyse the impact of such events to come up with strategies to mitigate risks associated with capital.

• Crucial learning experience

Integrating AI into intraday trading can give you insights on your trading patterns and can be a good learning experience. A careful analysis of these patterns can help you dissect your trading, understand what worked and what did not, and implement change in trading behaviour. As an intraday trader, it is vital for you to keep learning from past trading experiences to improve future performance.

• Help in risk management

Risk management is vital for intraday trading. AI can help you effectively manage risks by setting predefined risk parameters. Doing so can help you mitigate losses in volatile markets and take advantage of short-term price movements.

Important Things to Keep in Mind

While AI does bring multiple benefits to the table, there are certain things you need to keep in mind. These include:

• Mastering AI tools

To get the most out of AI, it is crucial for you to master AI tools and understand their applications. For example, prompt engineering can help you generate meaningful responses through which you can get the most from your trading.

• Avoid over dependence

While it can be an effective tool, it is advisable to not depend on it completely. Human-led approaches will continue to play a defining role, as there will be situations where human guidance and experience will be needed to make strategic decisions.

Wrapping it Up

In the coming days, intraday trading and stock trading in general are likely to see greater usage of AI tools for analysing markets and making decisions accordingly. That said, a combination of machines and human intelligence is imperative for achieving optimum results.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI-prescribed Combined Risk Disclosure Document before investing. Brokerage will not exceed SEBI’s prescribed limit.