@Ai and Trade

AI in the trading world is basically about using machines to spot patterns, make decisions, and manage risk faster (and often better) than humans can.

1. Where AI is used in trading

📈 Market prediction & signals

Machine learning models analyze price, volume, order books, indicators, etc.

They look for patterns humans can’t easily see.

Used for short-term trading (HFT, day trading) and longer horizons.

🧠 Algorithmic & quantitative trading

AI-driven bots automatically place trades based on rules or learned behavior.

Reinforcement learning models “learn” trading strategies through trial and error.

Big hedge funds (Renaissance, Two Sigma, Citadel) live here.

📰 News & sentiment analysis

NLP models scan:

News

Earnings calls

Twitter / Reddit

They convert sentiment into buy/sell signals.

This is huge in crypto and equities.

⚠️ Risk management

Detects abnormal behavior or regime changes.

Helps size positions, set stop-losses, and reduce drawdowns.

AI often shines more at not losing money than at winning big.

🧪 Strategy optimization

Backtesting thousands of strategy variations quickly.

Feature selection: deciding which indicators actually matter.

Avoiding overfitting (the silent killer of AI trading).