AI stock trading bots: Do they really work? (we tried them in 2023)
AI stock trading bots, which can be accessed by individuals through subscription services, buy and sell stocks automatically based on an algorithm. The use of AI stock trading bots to generate profits is often referred to as ‘robot trading’ or ‘algorithmic trading’.
In this Asia Markets guide, we’ll explore the world of AI stock trading bots and share our experience with some of the most well-known applications.
History of AI stock trading bots
Using a robot to conduct your stock market trading might seem a little scary, but the use of AI stock trading bots and machine learning in the professional asset management industry has a long history.
The first studies into applying artificial intelligence to investment processes date back to the 1950’s, however it wasn’t until the 1980’s when computing advancements allowed AI trading to really take off.
One of the pioneering hedge funds to begin using bots for stock trading is the famous U.S. hedge fund, Renaissance Technologies.
Renaissance was founded by mathematician and former Cold Wall code breaker, James Simmons.
In an interview on the Nummberphile YouTube channel, Simmons explained how he moved from investing using fundamental analysis (human evaluation of company fundamentals, such as financial statements and management), to computer modelling.
“In looking at the patterns of the prices, I could see there was something we could study here, that there were maybe some ways we could predict prices mathematically and statistically,” Simmons said.
“I started working on that, and gradually brought in some other people and gradually built models, the models got better and better and finally the models replaced the fundamental stuff.
“It’s what’s called machine learning, you find things that are predictive, you might guess – oh such and such should be predictive, might be predictive, then you test it out on the computer and maybe it is, maybe it isn’t. It’s mostly statistics and some probability theory.”
Renaissance is still operating and now manages around $130 billion.
According to The Wall Street Journal, the hedge fund’s computing power today provides “more than 100 trillion calculations a second— and more than 11 petabytes of storage, the equivalent of five times the data stored in all U.S. academic libraries.”
There are now tens of thousands of respected asset management firms around the world that rely on AI trading and bots to generate returns for investors. Many of these are known in the asset management industry as ‘quantitative’ or ‘quant’ investment managers.
AI stock trading bots for non-professional investors
Most institutional asset managers build their own in-house proprietary AI stock trading systems, and historically the technology has not been available to individual investors. However, more recently all that has changed.
The democratization of AI stock trading bots, is now giving everyday investors access to cutting edge technology that used to only be accessible to large institutions.
And the rise of machine trading in recent years has been staggering.
While it’s unclear exactly how many orders are executed via stock trading bots on U.S. exchanges such as the NASDAQ and NYSE, some experts have put the figure at 80% of all daily trades.
So, how can you get in one the action?
The best AI trading software
First, buyer beware. The world of AI stock trading bots is a hot bed for scams and illegitimate get-rich-quick schemes. You should always ensure any stock market trading service you sign up to has a good reputation and honest people behind it.
Here’s a list of the best AI trading bots and AI trading software services for individual investors:
TrendSpider (highly recommended)
TrendSpider actually works (go straight to the website here). There’s no promises of getting rich quick or ‘explosive returns’, however this AI stock trading software, which offers various ways for investors and traders to use its AI technology, can be a great asset if used wisely.
So many AI trading platforms are outright scams. One of the biggest red flag is faceless teams behind the platforms – if you’re looking at signing up to a trading platform with faceless founders and management, get out now!
One of the great things about TrendSpider is its founder and CEO is Dan Ushman, a respected trader and technology entrepreneur. You can see the full management team and their public profiles here. TrendSpider is a U.S.-registered company, headquartered in Chicago, Illinois.
So, how does it work?
Once you sign up, you’ll be prompted to take a 10-minute in-app training session. It’s hugely valuable. You’ll also be offered access to some great further education including the TrendSpider University and the platform’s Discord channel.
When underway, depending on the level of access you signed up to, you’ll find a range of powerful tools all backed by offical market data from the likes of NYSE, ICE, CME Group, NASDQ, IEX, and CBOE.
We successfully activated a bot to trade 30 minute moving average crosses. You can set your trade limits, and also active SMS notifications for whenever your bots execute a trade, which provides great peace of mind.
Some technical analysis knowledge will help you successfully use TrendSpider.
But the power of the platform is remarkable. You can set AI stock trading bots to do the hard word for you without any coding knowledge at all. This would have seemed like a dream just a few decades ago!
And a bonus is the powerful charting tools the platform provides, allowing you to set trading indicators. These alone are worth the subscription.
TrendSpider is certainly an elite platform for anyone looking for a good AI stock trading bot application. The only downside is it’s probably too advanced for the novice trader.
We recommend TrendSpider for anyone with at least two years trading/investing experience.
Trade Ideas (highly recommended)
Trade Ideas is another AI stock trading platform with respected founders and management. It’s been operating since 2003 and in recent years has been a regular in the INC. 5000 Fastest Growing Companies list.
When you sign up to Trade Ideas, you can first get used to the platform in a simulated environment. When you’re comfortable and ready to roll… It’s time to let the algorithms do their thing!
Trade Ideas’ AI technology provides users statistically-weighted trade entry and exit signals, which can be linked up to many brokerage accounts, allowing the trades to be executed swiftly. There’s also loads of other technical and fundamental analytical features, powered by AI.
A great value-for-money feature on Trade Ideas, is the Trading Room.
In the Trading Room, users can watch and interact with experienced trader Barrie Einarson live during the day, Monday through to Friday.
Stock Hero is a powerful platform for anyone wanting to get into AI stock trading bots. The great thing about Stock Hero is it’s suitable for advanced traders and investors, along with beginners.
This is another platform that offers new users a simulated environment to test trading bots before you put your hard-earned money to work.
Once underway, you have options to create you own bots, with no coding.
The bots can be deployed across stocks and cryptocurrencies, and can be used to exploit long positions (when a stock price goes up), along with short portions (to profit from a falling stock price).
You also have the option of implementing dollar cost averaging, which is great feature.
But one extra feature that really sets Stock Hero apart (and is great for beginners) is the ‘Bot Marketplace’ that comes with a Premium subscription.
Here, you can access bots designed by other succeful traders who use the platform.
Stock Hero is owned by a Singapore-registered company known as Novum Global Ventures Pte Ltd.
Tickeron is another popular AI stock market bot service.
It’s built on over 100 backtested algorithms for trading stocks, ETFs, forex and cryptocurrencies. Unlike other platforms, there is limited ability to create and set your own bot trading signals, so you do rely on the developer’s algorithms for success.
Tickeron provides some data on the success of its AI bots, which range from annualised returns of +4%, all the way up to +147%. However, we can’t independently verify this data, and investors should always be cautious when it comes to ‘annualised’ returns.
Tickeron does however, provide an easy-to-use platform, and we had some early success with the platform’s trade ideas and AI bots.
Other AI trading software and platforms to consider
Some other platforms to consider (an importantly do your own research on) include:
Scanz provides AI technology that can be used to screen thousands of stocks, and indentify those with the technical attributes you’re looking for. It’s a great tool for active traders, which can save you days of research.
Algoriz is developed by former Goldman Sachs bankers. It allows users to build and automate trading strategies for both stocks and cryptocurrencies. Once you have designed your bot, you can test it in a simulated environment. You won’t need any coding skills to use Algoriz, but you will need to be an experienced trader to get the most out of it.
This is another platform for experienced traders only. Users can select from a database of over 7,000 market signals to develop their own trading algorithms with no coding. Build Alpha was founded by respected trader, David Bergstrom.
Final word on AI trading software
AI stock trading bots can work for you. Users do, however, need to be patient. You should use trading simulations, or paper trading, where possible and be willing take in all the education provided by many respected platforms.
Finally, as any good personal finance experts will tell you – never invest more than you’re willing to lose.
What is the best AI stock trading software?
Does AI stock trading really work?
Yes, AI stock trading really works, and many easy-to-use software platforms now give individual investors access to the type of powerful tools used by large investment institutions. However, users need to dedicate time to learning how to master the various platforms such as TrendSpider and Trade Ideas. You also need to have some knowledge of technical stock analysis before signing up.
What are the risks of AI stock trading?
There are many AI trading scams, don’t fall for them. Do you research on every platform you’re looking at, in particular the reputations of the company and people behind the AI trading software. Further, remember if using a bot to make your trades, set limits and alerts and monitor the trades closely – things can go wrong. The most important thing to remember is, never invest more than you’re willing to lose.
Can you get rich quick from AI stock trading bots?
No. AI stock trading software is not a way to get rich quick. However, when used correctly, many traders who use reputable AI software have great success. Avoid any trading or investing services with ‘get rich quick’ claims.
AI not for you?
If you prefer human-driven stock market analysis, read our review of the Capitalist Exploits investment service and newsletter. Capitalist Exploits provides in-depth stock analysis, and allows users to follow the portfolio of a real-world hedge fund.