There has been much ado about AI lately and we are going to sort through it right now and get to the bottom line of what it means for traders. Let’s look at the sector, the technology, the regulation and how to use it to trade.

The Stocks

Without doubt it has offered one of the strongest bull runs since the dot com era and paid out some really juicy returns for the traders who rode the wave. But like the previous bubble the valuations of these stocks seemed to defy logic and it isn’t a matter of if but only when they will adjust and correct.

But the stock market has seen the birth of many industries and will see many more. They often offer a generally consistent path as they mature and get through the volatility of their adolescence. My best guess is that we are at the point where they are teenagers and are getting a solid dose of reality. Some will adapt and some will crumble, but the AI sector is here to stay.

The Regulation

Right now the challenge is self regulation vs government regulation. OpenAI has taken a lot of the heat in recent headlines but all of the AI providers are in the hot seat. Expect there to be some scrambling as they try to sort this out and to see a lot of PR about how each is doing it the best. What will be important is what metrics of success the market will look for to get behind one big AI darling or the other.

The Technology

Not only have the AI providers seen a boon in share price as they launch through the atmosphere but the chip makers and the companies applying the technology have also seen the boost the two letters can provide. Simply adding “AI” to anything seems to propel it higher. When that effect starts wearing off, we should get a better glimpse of what AI will look like for the future. How it is applied as an actual tool with effective results and not just a gimmick.

How to Use it To Trade

We have seen a rate of development in market analysis that parallels the birth of computer based charting. But the undeniable rule that still stands true is garbage in, garbage out. The difference is that the rate of speed at which this happens can produce a land fill of garbage if you are wrong.

The predictive power is both impressive and effective with framed with the right instruction. When experienced trading pros are used to plug their logic and wisdom into a AI agent the potential is limitless. There hasn’t been any application that is 100% accurate (nor should we expect that) but some have produced some impressive results. (check out the model that former market maker, Keith Harwood has put to use in a live demo tomorrow at 1pm. Here’s the link to get in).

But like everything else in trading the bottom line is how it works for you. Test it out, experiment. See how others are using it and adapt it to fit your style. It can be full on predictive models to just asking it which are the most oversold stocks today. There is no doubt it can do a lot of the heavy lifting. If you can find a way to let it do your work for you, that is definitely the winners circle.

Keep learning and trade wisely,

John Boyer

Editor

Market Wealth Daily