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Trading financial products on margin carries a high degree of risk and is not suitable for all investors. Please ensure you fully understand the risks and take appropriate care to manage your risk.

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Trading Terms

AI Trading: What it is & how it works

An AI trading robot sitting at a desk with four computer screens.

Artificial Intelligence (AI) trading is revolutionizing the financial markets, offering traders and investors cutting-edge tools to analyze data, forecast trends, and execute trades with remarkable speed and precision. Whether through machine learning models, natural language processing, or advanced algorithms, AI reshapes trading decisions. 

In this guide, we’ll explore what AI trading is, provide examples of how it works, examine its advantages and disadvantages, and list some popular AI stocks and ETFs that you may want to consider adding to your portfolio. By understanding the impact of AI on trading, you can better position yourself to leverage this technology for your financial goals.

AI Trading: What is it?

AI trading refers to artificial intelligence and machine learning algorithms to analyze market data and execute trades automatically. It eliminates the emotional aspect of trading by relying on data-driven models to make decisions. The key features of AI trading include:

  • Market analysis: Analyzes vast amounts of market data, financial news, and economic indicators to identify trends and trading opportunities.
  • Algorithmic execution: Automatically places buy or sell orders based on predefined criteria or strategies.
  • Machine learning: Continuously learns from new data to refine trading strategies and improve accuracy.

Understanding AI trading is essential for anyone looking to capitalize on the technological advancements transforming the financial markets. By utilizing machine learning algorithms, advanced data analysis, and automated execution, AI trading can offer an unprecedented level of speed, precision, and efficiency. 

However, while the potential benefits are significant, you should approach this new landscape with a solid understanding of both the technology and the risks involved. With AI continuing to evolve, staying informed and adaptable will be key to successfully leveraging its power in your trading strategy.

AI Trading: How it works

Artificial Intelligence has brought a paradigm shift in trading by enabling automated systems to analyze market data and execute trades with minimal human intervention. Understanding how AI trading works requires looking at practical examples that illustrate the technology's capabilities. By grasping these concepts, traders can better appreciate the nuances and power of AI-driven trading strategies.

Example: Algorithmic trading in Forex.

Let’s take an example of a Forex AI trading bot designed to trade the EUR/USD currency pair:

  1. Data collection: The AI system gathers historical price data, economic news, and market sentiment from various sources.
  2. Training the model: Using historical data, the system is trained to recognize profitable patterns and trends.
  3. Strategy development: The model develops a strategy based on identified patterns, such as mean reversion or trend-following.
  4. Execution: When the EUR/USD pair hits certain criteria (e.g., RSI below 30), the bot automatically executes a buy order.
  5. Continuous learning: The bot continuously analyzes new data to refine its strategy.

This example demonstrates the incredible potential of AI trading systems to process vast amounts of data and execute trades with speed and accuracy. However, it’s essential to remember that while these systems can identify profitable patterns, their performance is only as good as the data and strategies they are based on. 

By understanding how AI trading works, traders can harness the power of machine learning algorithms to enhance their trading strategies, improve risk management, and potentially increase profitability in a rapidly evolving market.

AI Trading: Advantages and disadvantages

Advantages Disadvantages
Speed and efficiency: Executes trades faster than any human trader, ensuring opportunities are not missed. Overfitting: Models can become too tailored to historical data, reducing their effectiveness in new market conditions.
Emotion-free decisions: Eliminates emotional biases that often affect trading decisions. Technical issues: Bugs or system errors can lead to significant losses if not properly managed.
Data analysis: Analyzes large volumes of data that would be impossible for humans to process in real time. High costs: Developing or subscribing to advanced AI trading systems can be costly.
24/7 operation: Can trade across global markets around the clock without fatigue.

AI Stocks:

  1. NVIDIA (NVDA): Market leader in GPUs that power AI systems.
  2. Alphabet (GOOGL): Google's parent company, heavily invested in AI research.
  3. Microsoft (MSFT): A tech giant with a strong focus on AI through Azure.
  4. Tesla (TSLA): Develops self-driving technology based on AI.
  5. IBM (IBM): Known for its Watson AI platform.


  1. Global X Robotics & Artificial Intelligence ETF (BOTZ)
  2. ROBO Global Robotics and Automation Index ETF (ROBO)
  3. ARK Autonomous Technology & Robotics ETF (ARKQ)
  4. iShares Robotics and Artificial Intelligence ETF (IRBO)

How to trade AI stocks and ETFs:

Investing in AI-related stocks and ETFs can offer a gateway to capitalize on the rapid growth of artificial intelligence technologies. Whether you're interested in companies that develop AI hardware, software, or those integrating AI into their business models, this guide will help you understand the fundamentals of trading AI stocks and ETFs. 

While traditional investing options are available, using Contracts for Difference (CFDs) provides an alternative approach for traders who prefer flexibility and leverage. Here’s how you can start trading AI stocks and ETFs and what to consider when doing so.

  • Research: Study the fundamentals and market trends affecting each stock or ETF.
  • Choose a broker: Choose a trading platform that provides access to a wide range of AI stocks and ETFs. Alternatively, consider using a broker like Skilling that offers CFDs, allowing you to trade on price movements without directly owning the underlying assets.
  • Develop a strategy: Define your investment goals, risk tolerance, and time horizon.
  • Execute trades: Place buy or sell orders based on your analysis and strategy.
  • Monitor and adjust: Continuously review your portfolio and adjust positions based on performance.
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AI trading represents a new frontier in the financial markets, providing traders with data-driven insights and automated execution. Investors can better navigate this evolving landscape by understanding how it works, its advantages, and its challenges. 

Trading AI stocks and ETFs, whether directly or through CFDs, provides a unique opportunity to tap into the rapidly evolving field of artificial intelligence. By thoroughly researching companies and funds, developing a clear trading strategy, and leveraging the flexibility of CFDs, traders can navigate the complexities of the AI market and potentially profit from this technological revolution. Remember to continuously monitor market trends and refine your strategies to stay ahead in this dynamic and innovative sector.

AI trading provides an option for traders, but it’s important to note that it is not an endorsement by Skilling.

This article is offered for general information and does not constitute investment advice. Please be informed that currently, Skilling is only offering CFDs.

Experience Skilling's award-winning platform
Try out any of Skilling’s trading platforms on the device of your choice across web, android or iOS.
Sign up