The ultimate guide to picking stocks using AI

Why use AI to invest in a stock exchange?

The current financial landscape is changing and new artificial intelligence (AI) tools are emerging that are becoming essential for all investors who want to optimize their portfolio. Investing in the stock market presents significant challenges, the choice of stock exchange shares is based on an optimal ratio between maximization of earnings and a minimum level of risk. AI's new capabilities are radically changing our way of analyzing stocks and predicting stock market movements. The trends and correlations that were previously invisible to the human eye are now becoming much more accessible thanks to advanced algorithms capable of processing huge volumes of data.

In 2021, the AI market in the fintech sector was worth around USD 9.45 billion and, with a compound annual growth rate of 16.5% from 2022 to 2030, it could reach USD 41.16 billion by 2030 according to a study by Grand View Research. This illustrates the growth potential of these technologies and allows all types of investors, from beginners to confirmed experts, to benefit from sophisticated market analyses which are unfortunately too often reserved for financial institutions. AI also has the advantage of reducing human bias by providing insights based on objective and up-to-date data. Using artificial intelligence to select stock exchanges becomes not only a strategy to achieve more accurate results, but also offers the possibility to automate complex processes.

You will understand this, by integrating AI's stock analysis into your investment strategy, you will improve your decision-making by reducing biases and by being both more responsive and more informed.

Understand the analysis of stocks with AI

Artificial intelligence (AI) and some of its sub-domains such as machine learning offer increasingly detailed stock analyses thanks to advances in algorithms that sort and interpret huge volumes of financial data with unparalleled speed and accuracy.

AI is based on innovative techniques such as supervised learning in which models are trained to predict future values based on historical data. The predictive models, which are the basis of the AI stock market predictions, involve a set of indicators to anticipate market movements. These indicators will include economic factors, price history, social media sentiment...The quality of the models plays a key role in predicting. Some studies show that predictive AI models can provide 24% to 28% more accurate results than more general models. This increased capacity comes from training, model, but also from the quality and quantity of data available to the model. Thanks to these new capabilities, AI can discover patterns that the human eye could omit, thus providing unique perspectives on market trends.

But the use of artificial intelligence to select stock on the stock exchange does not only provide a precise prediction, but also helps to reduce cognitive biases that can affect investment decisions. Indeed, every human being can, to varying degrees, experience emotional biases such as fear or greed, which can lead to bad decisions. But AI-based systems do not know this notion of emotions: they rely solely on tangible data and test scenarios, thus providing a more objective and rational approach to the selection of stocks. AI is not intended to replace your decisions, but it increases your chances of success in the stock market investment.

Key criteria for choosing stock via AI

Although AI may prove to be a valuable ally in the choice of stock exchange shares, it is not infallible and should not replace a wise human decision. To make the best use of AI's power in stock analysis, it is essential to focus on certain key criteria. Diversification must always be your first line of defence against potential risks. To comply with this rule, artificial intelligence can help you analyze a vast set of data to better understand the correlations and dispersion of risks in your portfolio. Models of AI stock market prediction can suggest a combination of stocks that you can then verify in order to reduce overall volatility while seeking to maximize return.

In addition to diversification, you should not lose sight of fundamental analyses based on financial metrics such as historical performance, risk-adjusted volatility ratios, or dividend returns. The advantage of AI is that it not only compiles this data, it will integrate it into technical analyses that will give you a more complete and nuanced perspective, all with a significant saving of time. This integrated approach can, for example, reveal hidden trends and reversal signals that would be difficult to detect otherwise.

AI stock pickers applications therefore offer a form of assistance and combine both human experience and their massive processing capacity.

Popular stock picking applications and tools

Many investors are turning to artificial intelligence and although there are many tools available, they are not all reliable and do not all provide the same services. Using AI to pick stocks is based on a combination of advanced analysis models and human decision-making. Depending on the data and analysis you want to help you with, different platforms exist among which you can find Tickeron, EquBot and Zelyos, which offer each of the powerful tools related to AI stock market prediction but in different forms.

Tickeron offers a multitude of services to investors and artificial intelligence takes a prominent place in this offer. It offers tools such as real-time signals (on 5, 15, 60 minutes intervals), robots ('AI Robots'), screeners of stock, trend prediction engines ('Trend Prediction Engine'), and the possibility to search for graphic motifs (patterns) through numerous stock, ETFs, mutual funds, etc. The platform is very comprehensive and offers several payment plans. But it targets a fairly well-established investor audience and is so complete that it is sometimes difficult to find it.

EquBot will use AI with IBM Watson to serve investors, including by making prediction and decision support. It has a huge computing power that allows it to analyze very large volumes of structured or unstructured data. EquBot is behind the "AI Powered Equity ETF (AIEQ)" ETF, which monitors thousands of listed companies, uses signals from conventional financial data, articles, media, feelings, etc., to build a portfolio and rebalance it according to the opportunities deemed relevant by the model. But EquBot is targeting professional clients, not individuals.

Zelyos is distinguished from the two previous tools by its transparency and the simplicity of AI stock analysis accessible to all, from the starting investor to the most expert. The platform focuses on the essential elements of stock analysis, providing an overall stock rating, a risk score, a future price projection, an analysis of market sentiment regarding the stock in question, and much more. The aim is not to replace human analysis and decision-making, but to save investors time and give them a more accurate picture of the current market situation so that they can make the best possible choices.

To choose your tool properly, you need to consider not only your investment objectives but also your level of expertise. There are tools for all types of investors but they still require a minimum of understanding of both the tool and the fundamental principles of investment.

Common errors and pitfalls to avoid for beginners

Although artificial intelligence to select stock on the stock exchange has many advantages, it is essential to understand its limitations before proceeding. One of the most common errors, especially in novices, is to overestimate the predictive ability of AI without independent validation of the results of the analysis. Although AI is able to quickly analyze huge amounts of historical and current data, it may also have some meanings as simplifying certain essential variables to the extreme. Unforeseen events such as geopolitical crises or natural disasters can, for example, strongly impact markets and then be misinterpreted by AI.

It is also necessary to avoid excessive dependence on technology. Using ai to pick stocks offers a great deal of information but should not overstep traditional evaluation methods, such as fundamental and technical analysis. By investing solely on the basis of predictions made by AI, the investor takes the risk that the machine will miss out on certain human factors, underlying trends or indirectly related to stock... AI stock analysis and human decision form the ideal duo.

While AI tools generally have access to a lot of data, be sure to stay informed about macroeconomic developments: interest rates, monetary and fiscal policies, and other economic indicators. If the tool you use does not have this information, it will pass on and it will be up to you to make the right decisions. Keep in mind that a good investor combines technology and traditional know-how to navigate the stock markets successfully.

Conclusion: maximize the benefits of AI while remaining cautious

As in many other areas, artificial intelligence represents a major step forward in the financial sector and in how we analyse and interact with financial markets. By using the new tools of analysis and predictions, investors can gain in efficiency. Studies show that the AI market in the financial sector is bound to grow significantly in the coming years, it should greatly benefit from this enthusiasm around AI. However, it is crucial to remember that even the most advanced technology does not replace the need for a fundamental and detailed understanding of financial principles.

If you want to take full advantage of the benefits of artificial intelligence in your stock market investments, you should use it as a valuable but not exclusive tool. A strong investment strategy is based on technical analysis and key investment fundamentals that do not change despite the advent of AI. Artificial intelligence is a valuable ally but does not replace the informed decision-making capacity of a human being.

Continue to train and learn about market trends and new technological developments, as a well-informed investor is often the best prepared to deal with market uncertainties. Mix technological innovation with vigilance and personal knowledge to take advantage of AI in the complex landscape of stock market investment.