We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
My mother was a senior trader and managing direction at a big Wall Street bank for over four decades. During her long career, she witnessed and navigated several booms and busts, including Black Monday (the stock market crash of 1987 where the S&P 500 dove 20% in a single session), the internet boom of the late 1990s, and the Global Financial Crisis of 2008.
Though booms and busts will always exist, one constant was the dizzying pace technological changes for stock trading. For example, back in my mother’s early days, traders would send orders via a tubing system like you may see today at a bank. Because the internet did not exist, traders would need to rely on a ticker tape, shouting out orders across the room or on a phone.
Artificial Intelligence and Stock Trading
Fortunately, my mother embraced new technology and continued to prosper with the advent of electronic trading. An open mind and a will to learn new technologies can give you a leg up over the market. For example, the late Jim Simons successfully leveraged computers and algorithms to amass a fortune of more than $30 billion. Ken Griffin, the founder of Citadel, started his career by embracing satellite technology in his dorm room. By using a satellite, Griffin could obtain stock quotes faster than his competition.
The AI Revolution is Here
In late 2022, OpenAI and Microsoft ((MSFT - Free Report) ) launched ChatGPT, a chatbot leveraging a large language model (LLM).Within months, ChatGPT grew like wildfire to become the fastest-growing consumer app in history, while several other mega-cap tech companies like Alphabet ((GOOGL - Free Report) ) and Apple ((AAPL - Free Report) ) raced to catchup. To anyone paying attention, the next technological advancement is here.
“You adapt, evolve, compete, or die.” ~ Paul Tudor Jones
Wall Street juggernauts like Citadel, Morgan Stanley ((MS - Free Report) ), and Bridgewater Associates are already investing in and embracing AI to gain an edge in the market. Though most investors do not have the same resources, smaller investors have their advantages, such as flexibility and liquidity. I believe investors should start learning to use this groundbreaking technology.
How to Use AI for Stock Trading
Though I believe in embracing new technology, I also believe in only using it if it makes my life easier. Because ChatGpt is currently the most widely used AI program, I will use it for examples. Below are three ways I use AI for trading, including:
1. Build an Indicator With AI
Few investors probably realize that they can type a prompt into ChatGPT for a trading indicator and the chatbot will spit out a script and directions on how to add it to your charting platform in seconds. For this example, I typed into ChatGPT, “Build a TradingView indicator that changes the color of the volume bar to bright green when the volume is more than double the 50-day average.” Rather than taking hours to code, ChatGPT delivered the complex code within seconds, and all that is required from here is to copy and paste it into the platform.
Image Source: ChatGPT
2. Portfolio Analysis and Stats
In being in the financial services industry for more than two decades, I have noticed that most amateur investors focus too much of their time on stock picking or finding the next hot tip when they should instead analyze themselves and their portfolio’s metrics. Luckily for these investors, generating portfolio metrics is no longer tedious. For this exercise, I typed in, “Use the following trade data to generate important stats about my stock portfolio: Total Trades: 52 Winning Trades: 39 Average Winner: 30.80% Losing Trades: 13 Average Loser: 9.97%”
Within seconds, ChatGPT delivers important portfolio metrics such as win rate, loss rate and average gain per trade.
Image Source: Zacks Investment Research
3. Learn About Markets With AI
Access to AI is like having all the world’s knowledge at your fingertips. Suppose you want to learn about a complex options strategy. Rather than searching for a book on the topic, you no longer need to leave your computer and can instead ask a chatbot like ChatGPT or Google’s Gemini.
AI and Robo Advisors
Though AI is a net value add to Wall Street, it can also be used as a buzzword in a sales pitch for robo-advisor products. Before investing with a “robo-advisor,” investors should weigh the advisor’s performance against benchmarks like the S&P 500 Index. What investors will discover is that most of these robo-advisors charge high fees to invest in an index-like portfolio.
Bottom Line
The AI revolution is here, and investors should learn to leverage breakthrough technologies like ChatGPT and Gemini to gain an edge in the stock market.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
How to Use AI and ChatGPT for Stock Trading
My mother was a senior trader and managing direction at a big Wall Street bank for over four decades. During her long career, she witnessed and navigated several booms and busts, including Black Monday (the stock market crash of 1987 where the S&P 500 dove 20% in a single session), the internet boom of the late 1990s, and the Global Financial Crisis of 2008.
Though booms and busts will always exist, one constant was the dizzying pace technological changes for stock trading. For example, back in my mother’s early days, traders would send orders via a tubing system like you may see today at a bank. Because the internet did not exist, traders would need to rely on a ticker tape, shouting out orders across the room or on a phone.
Artificial Intelligence and Stock Trading
Fortunately, my mother embraced new technology and continued to prosper with the advent of electronic trading. An open mind and a will to learn new technologies can give you a leg up over the market. For example, the late Jim Simons successfully leveraged computers and algorithms to amass a fortune of more than $30 billion. Ken Griffin, the founder of Citadel, started his career by embracing satellite technology in his dorm room. By using a satellite, Griffin could obtain stock quotes faster than his competition.
The AI Revolution is Here
In late 2022, OpenAI and Microsoft ((MSFT - Free Report) ) launched ChatGPT, a chatbot leveraging a large language model (LLM).Within months, ChatGPT grew like wildfire to become the fastest-growing consumer app in history, while several other mega-cap tech companies like Alphabet ((GOOGL - Free Report) ) and Apple ((AAPL - Free Report) ) raced to catchup. To anyone paying attention, the next technological advancement is here.
“You adapt, evolve, compete, or die.” ~ Paul Tudor Jones
Wall Street juggernauts like Citadel, Morgan Stanley ((MS - Free Report) ), and Bridgewater Associates are already investing in and embracing AI to gain an edge in the market. Though most investors do not have the same resources, smaller investors have their advantages, such as flexibility and liquidity. I believe investors should start learning to use this groundbreaking technology.
How to Use AI for Stock Trading
Though I believe in embracing new technology, I also believe in only using it if it makes my life easier. Because ChatGpt is currently the most widely used AI program, I will use it for examples. Below are three ways I use AI for trading, including:
1. Build an Indicator With AI
Few investors probably realize that they can type a prompt into ChatGPT for a trading indicator and the chatbot will spit out a script and directions on how to add it to your charting platform in seconds. For this example, I typed into ChatGPT, “Build a TradingView indicator that changes the color of the volume bar to bright green when the volume is more than double the 50-day average.” Rather than taking hours to code, ChatGPT delivered the complex code within seconds, and all that is required from here is to copy and paste it into the platform.
Image Source: ChatGPT
2. Portfolio Analysis and Stats
In being in the financial services industry for more than two decades, I have noticed that most amateur investors focus too much of their time on stock picking or finding the next hot tip when they should instead analyze themselves and their portfolio’s metrics. Luckily for these investors, generating portfolio metrics is no longer tedious. For this exercise, I typed in, “Use the following trade data to generate important stats about my stock portfolio: Total Trades: 52 Winning Trades: 39 Average Winner: 30.80% Losing Trades: 13 Average Loser: 9.97%”
Within seconds, ChatGPT delivers important portfolio metrics such as win rate, loss rate and average gain per trade.
Image Source: Zacks Investment Research
3. Learn About Markets With AI
Access to AI is like having all the world’s knowledge at your fingertips. Suppose you want to learn about a complex options strategy. Rather than searching for a book on the topic, you no longer need to leave your computer and can instead ask a chatbot like ChatGPT or Google’s Gemini.
AI and Robo Advisors
Though AI is a net value add to Wall Street, it can also be used as a buzzword in a sales pitch for robo-advisor products. Before investing with a “robo-advisor,” investors should weigh the advisor’s performance against benchmarks like the S&P 500 Index. What investors will discover is that most of these robo-advisors charge high fees to invest in an index-like portfolio.
Bottom Line
The AI revolution is here, and investors should learn to leverage breakthrough technologies like ChatGPT and Gemini to gain an edge in the stock market.