How AI and Machine Learning Help in Intraday Trading?

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The fintech industry is constantly evolving, and its effect can be seen in every aspect. Not just in how it is impacting the growth of businesses on global levels or our lives, but even in the stock markets. The incorporation of AI and machine learning with fintech is slowly revolutionising the way trades take place, how traders analyse the market, how they come to a decision and how it affects their returns. 

If you are also an intraday trader, curious about how AI and machine learning are impacting intraday trading, you are at the right place. In this blog, we'll discuss AI and machine learning in intraday trading and how they are helping in financial markets. 

What is AI in Trading?

With the advent of technology, use of AI has also evolved. In simple words, AI is the use of computer software to imitate the intelligence of human beings in performing different tasks. The most common examples are Siri and Google Assistant.  Gradually, we have started using AI in different industries as well. Be it banking, medical healthcare, e-commerce, or customer support, use of AI is involved in all these sectors. 

When it comes to intraday trading , you can think of AI trading as a blend of human intelligence put together with different algorithms to analyse the stock market, just at a much faster speed.

What is Machine Learning?

In the simplest words, machine learning is the language of computers and the AI algorithm. It is concerned with how a computer system can manage datasets that are too large for a human to sort in a short period of time. Basically, machine learning is a subset of artificial intelligence, and it allows computer software to trace different patterns and identify trends out of them by analysing large datasets. 

In intraday trading, artificial intelligence uses machine learning techniques, natural processing language (NPL), etc. It is with its help that AI analyses huge market datasets and identifies trends out of it. All of it helps the computer predict the outcome of a trade and make decisions accordingly. In fact, it is not just to identify trends but also to discover opportunities the market presents, exploit the inefficiencies to make higher profits, and optimise trading strategies based on past market behaviour and the results of a specific strategy.

How Does AI in Intraday Trading Work?

AI trading is all about predictive analysis, which means predicting future trends and events by analysing past trends and events. Before the computer can start identifying trends, it needs to be taught how to do it. It all starts with training the AI algorithm with the help of machine learning. Once the algorithm gets accustomed to the process, it can start making more informed decisions on how to analyse the market and predict future trends. 

There is a diverse range of tools that AI-based trading companies use to train the algorithm to analyse historical data and enter successful trades. AI trading also involves different classes of trading, such as algorithmic trading, quantitative trading, high-frequency trading, automated trading, etc. 

How AI is Helping in Intraday Trading

AI trading, or the use of AI in trading , has been evolving rapidly. Here are some ways how AI has been helping and improving the entire set-up of intraday trading. 

  • Speed and Efficiency

Be it a human trader or a machine, participating in intraday trades requires agility in identifying trades, making a decision and acting on it. When it comes to AI trading, this software can analyse millions and millions of data in a few minutes, which is impossible for a human mind to achieve or even comprehend. However, when it comes to machines, they can sift through data sets containing millions of information in a matter of a few seconds. 

  • Analysing the Sentiment

Sentiment plays a crucial role in trading. If investor sentiment is positive towards a stock, they buy it more, thus increasing its demand and, by extension, its price. Similarly, if the sentiments are negative, they tend to sell off before the price falls, thus increasing its supply and making the price go down. Analysing market sentiment helps investors in making future predictions.

In this regard, AI can help traders collect millions of data from multiple sources, such as social media, news channels, websites, forums, etc. It uses NPL to read and analyse the data, which traders can leverage to make their intraday trading decisions. 

  • Identifying Patterns

Traders often sit in front of their computer screens for hours to read chart patterns and graphs and interpret the available information; however, with the help of machine learning, the process has not only become faster, but it has also eliminated the need for manual data processing. It can perform the task in a mere few seconds for a human trader. 

However, since the process is still not fully eliminated, there is still the presence of a human needed to determine the right place to look at. 

  • Emotionless Trading

Intraday trading decisions cannot be made based on emotions. As soon as emotions like greed and fear get involved, they start to corrupt the brain, thus forcing the trader to make impulsive decisions, which can bring out adverse effects on final results. 

Use of AI in trading eliminates that problem. Since AI doesn't have any emotions of its own, it operates fully based on the data available to it. If an instruction is fed to a trading software to sell a stock as soon as it hits ₹1,000, it will sell the stock the second it hits that price. It won't think about what if the price could go higher or lower. 


Use of AI and ML in intraday trading are all interconnected. Machine learning is what helps AI learn, and it is with AI that the computer software learns how to trade. While AI trading may still not be fully automated or 100% reliable, it has shown tremendous improvement. By leveraging AI in trading, traders can reduce the time of manual hard work and simply focus more on interpreting the results, making decisions and executing trades. It will eventually make the trades and their execution faster and more accurate. 

Frequently Asked Questions

Q1. What are some of the most popular AI trading strategies?

Ans. Some of the most popular AI trading strategies include algorithmic trading, natural language-based predictions, machine learning-based predictions and deep-learning-based predictions.

Q2. What are the different markets for intraday trading?

Ans. Different markets for intraday trading involve the stock market, commodity market, cryptocurrency market, foreign currency and derivatives market. 

Q3. Are AI algorithms agile enough to adapt to changing market scenarios?

Ans. AI algorithms are trained to adapt to changing market scenarios by continuously studying the changing data. It learns and then changes its strategy accordingly. This helps the algorithm to understand the change and modify its strategies accordingly. While it may not always be 100% accurate, it can show great results when combined with human efforts. 

Disclaimer: INVESTMENT IN SECURITIES MARKET ARE SUBJECT TO MARKET RISKS, READ ALL THE RELATED DOCUMENTS CAREFULLY BEFORE INVESTING. The asset classes and securities quoted in the film are exemplary and are not recommendatory. SAMCO Securities Limited (Formerly known as Samruddhi Stock Brokers Limited): BSE: 935 | NSE: 12135 | MSEI- 31600 | SEBI Reg. No.: INZ000002535 | AMFI Reg. No. 120121 | Depository Participant: CDSL: IN-DP-CDSL-443-2008 CIN No.: U67120MH2004PLC146183 | SAMCO Commodities Limited (Formerly known as Samruddhi Tradecom India Limited) | MCX- 55190 | SEBI Reg. No.: INZ000013932 Registered Address: Samco Securities Limited, 1004 - A, 10th Floor, Naman Midtown - A Wing, Senapati Bapat Marg, Prabhadevi, Mumbai - 400 013, Maharashtra, India. For any complaints Email - Research Analysts -SEBI Reg.No.-INHO0O0005847

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