Stock Market Day Trading System - Artificial Intelligence Can Help

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Shared by: aihaozhe2
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1/25/2011
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							If you want to be a day trader, but you are afraid of being a day tripper and losing
your shirt? Just use some Artificial Intelligence to help you do the right trade.

A day trader is a stock trader who holds a position with a stock for only a very limited
time - sometimes merely several minutes - before he makes a trade with that stock.
People who practice this are called day traders because most of their positions are
opened, and closed, in the same trading day. "Buy and hold" strategies are not for
them.

Day trading is controversial to say the least, and the fact is that over 90% of day
traders lose money instead of making it. The typical day trader is seen as little more
than a gambler... Yet, as we all know, there are some gamblers who are professionals -
and millionaires. They must know something that few other gamblers know. If a day
trader is to be successful, he too must know something that few others know.

Day traders suffer from the problems of market timing. With market timing, an
investor tries to predict the market's future direction. Economic data, including
technical indicators and even the financial and investment news, may be used to help
the trader determine what stock positions to take (short or long) and when to sell or
buy.

However, there are many investors who believe that it is impossible to time the
market. There are just too many variables, they say; and if there are any patterns
underlying market timing, they are too complex and subject to too much "noise" for
anyone to figure them out. Clearly, there are day traders who disagree with this - but,
then again, there is that fact that over 90% of these lose money, rather than make
money.

There is a lot of timing risk with active day trading. Timing risk is the margin of error
that a day trader takes on when s/he buys into a position that s/he won't make the right
move (or already did not make the right move depending on the stock price at the time
of purchase) to capitalize as much as possible on the latest market movement.

From market risk analysis comes the old adage that it is better to have "time in the
market" than to "try timing the market". Evidence for this is that the majority of
institutional money managers fail to do better than a simple index fund which follows
a time-in-the-market strategy of buy and hold.

In spite of the deck being stacked against them, day traders continue trying to make
their fortune their way. Most lose money...but, they sense one thing that happens to be
true: if the market is able to be timed correctly, they will make a killing. It's all a
matter of figuring out how to time it. If they could do that, they would have that
special knowledge that we mentioned above. But is this possible?
It is possible if they use one special tool - a day trading program. These artificial
intelligence (AI) programs have been around in the investment world since even
before the Internet. They have become far more advanced in the last almost 20 years;
and the Internet has made it possible for them to be used by many more people.
Institutional money managers have used day trading robots to help them for many
years, and those managers who make the best use of them are among the most
successful.

These AI programs are able to learn from past market timing mistakes, and from
analysis of stock charts and other market data. They learn just like a human trader
would, except since they don't need to sleep or eat and have no other distractions or
things to think about, they can learn far, far more rapidly and arguably with more
depth.

As a trader, you can program your robot with your preferred trading strategy
parameters, and the program will learn them and give you feedback as to how well
they do over a period of time so that you can make adjustments to the program if you
want to.

Day trading robots are also faster to move than a human can typically be. They use an
electronic trading platform that enables them to place orders instantly, so that loss due
to order lag is minimized.

So, for the day trader, the day trading robot is indispensable. There is no good reason
to do this kind of trading without the all-important help of AI. But with it, making a
fortune in day trading is possible.

						
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