Automating your Robinhood trades with artificial intelligence
In the past, the concept of artificial intelligence (AI) was largely confined to the realm of science fiction. Today, AI is very much a reality that’s constantly making waves in various industries, as its limitless possibilities make it a desirable feature to integrate into different applications. One industry in which the use of AI appears to be thriving in is trading.
Trading and AI
AI trading or automated trading refers to participating in stock trading without any human interaction. Simply put, the AI will trade on your behalf based on how it’s programmed. Because AI can outperform any human brain by a mile, it can, theoretically, make better trading decisions based on its analysis of millions of potential scenarios and evaluation of large chunks of data. Since AI is running purely on a software, it also has no emotions, which are often one of the biggest factors that can affect someone’s trading strategies.
However, the catch with AI is that while using robo-analyzers can make your life more convenient while trading, its software’s capacity is only as good as its underlying algorithm. Simply put, an inefficient or improperly designed software can end up costing you a significant amount of your investment.
Despite the caveat, many still choose to use AI trading as it can be more convenient, especially for inexperienced traders. One platform where this is applicable is Robinhood.
What is Robinhood?
Robinhood is an online trading platform whose claim to fame is its commission-free stock. Aside from that, it also offers exchange-traded funds (ETFs), options, and cryptocurrency trades. With its $0 account minimum and the ability to invest in stocks for as low as $1, it quickly became a popular trading platform for beginners.
What Robinhood doesn’t have, though, are mutual funds and bonds, as well as retirement accounts. It does have taxable investment accounts, and the platform could be a good choice for those looking to limit costs or trade cryptocurrency. It also has limited customer support, and the streamlined but simplistic interface can feel too restrictive for more seasoned traders.
Robinhood and AI Trading
Similar to many online platforms, you can use AI trading with Robinhood to automate your experience. Since it has attracted a lot of tech-savvy people, there are those who are trading through Robinhood by programming their own AI. One example of this is FreeStock, a project that’s still under development. Basically, FreeStock is a collection of trading bots designed to help investors manage their portfolio in Robinhood. Since it’s still in the development phase, there’s not much information about it, although it’s certainly proof that making a bot to trade in Robinhood is possible.
Here are other examples of bots made by individuals that can be used to trade with Robinhood (and one other software that’s made by a company):
- RNN-Robinhood: Built by Tom Grek as an experiment, he tried this bot for five days and concluded that his portfolio was in the same position as it had started.
- RobinhoodBot: Built by Kevin Guo as a side project, this bot is written in Python and implements the golden cross strategy as well as keeps track of trades made. Every time the script is run, the AI scans your portfolio and watchlist for stocks that meet the selling and buying requirements respectively.
- Power Invest AI: This app works using templates built on PwerSheet.ai. It can auto buy and hold, or buy and sell within the limits that are set based on a target monthly budget. It works by asking you a few questions that would help the AI make trading decisions tailored to your goals.
Benefits of Using AI to Trade
Aside from being fast and convenient, using AI to trade has many benefits for both beginners and seasoned traders. Here are some of them:
- Increased accuracy
- Eliminate emotionally-charged decisions
- Patterns can be discovered
- Faster reaction times to market trends
- Work without taking breaks
- Automates processes instead of doing them manually
- Can find associations in trends based on historical data
- Increase one’s competitive advantage
Using AI to trade in Robinhood can be convenient, especially for beginners. Since AI automates one’s trading process and experience, individual traders can then have a higher chance of gaining profit without having to deal with some of the frustrations and uncertainties inherent in trading.