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From beginner to investing: how beginners are optimizing profits with user-friendly AI 

In this article, we will look at investing money for beginners and analyze modern AI tools for traders. Also our readers will know how to learn about investing and what to pay attention to first when managing your finances.

If you are a beginner to investing, it will be useful to know what types of investments exist: 

  • Cash deposit. The simplest, initial level of investment. Profits do not always cover inflation. Bonds and mutual funds. Suitable for diversification of investments, require a fairly large investment. They have the highest reliability among all market instruments.
  • Stock market. Some of its participants are more focused on dividends, others on the growth of share price in the short and medium term. Investors choose not one, but several shares to invest funds – this is a so-called investment portfolio.
  • Commodity market. Here contracts for delivery of various commodities are traded, including oil, gas, food, cotton and all other resources needed by the economy.
  • ETF and index funds. They are very popular among beginners to investing. Their price movements generally repeat the market movements.
  • Crypto market. The most profitable and the most risky market, with the lowest degree of regulation. 

In all countries of the world the above mentioned markets are regulated by legislation. This allows the protection of the rights of traders and investors. As a rule, the stock market is more profitable, but also more risky than the bond market. Alternative assets such as cryptocurrencies have the highest risk and at the same time the highest profitability. 

Beginners to investing can recommend stock indices or investing in exchange traded funds (ETFs). A trader can also increase or decrease the risk of a trade by increasing or decreasing leverage. Traders usually call it margin. The best investment for beginners is the one with the lowest leverage. As the investor’s professionalism grows, he can gradually increase such parameters as margin. 

Advantages of AI trading for new investors

Stock market for beginners seems to be completely incomprehensible. The same can be said about the cryptocurrency market, commodity market or other types of investments where traders make money. Therefore, beginner traders use various tools in order to navigate in the market element. At first they were technical analysis indicators. Then various trading bots were added to them. And the newest tool for traders are the tools that use AI. If you too want to use AI, you need to know what these tools can do. 

Using AI in trading allows you to: 

  • Analyze the real-time flow of information from social media.
  • Using Stock screeners to filter and select stocks based on desired technical and fundamental indicators.
  • You can use the free ZACKS tool from the NASDAQ exchange.
  • Follow the trend by buying the asset on deeps and selling on uptrends.
  • Analyze the actions of other traders based on information from open sources.

Combine all of the above approaches in one way or another.

Features favoring novice traders 

Novice traders who start using AI tools together with bots and technical analysis tools right from the start are in a more favorable position than more experienced traders who do not know about the existence of such tools. For novice traders, it is advisable to decide first of all what assets they will trade and at what pace. Based on these data, they will be able to configure the desired software tools, including AI. After all, before automating any task with the help of AI-bots, it is necessary to know what this task will be. 

How to start investing 

For a beginner to investing it is not so important to have a financial instrument as it is to understand the basic rules of trading. It is necessary to know what long and short are, what a bullish and bearish position is. Long (bulls) means buying and short (bears) means selling. 

It should be understood that increasing the size of margin multiplies both possible profits and losses. Each trade requires payment of a commission, which should be taken into account when calculating your profitability as a trader. If you consistently make more profit than the commission, it means that the market and the margin size are chosen correctly. 

Decide your investment goals 

Before you decide what you are investing in, you need to decide why you are investing. The goal of a beginner to investing should not be to get a certain amount of money, but to acquire the habits and skills of a professional trader. 

Among them the main skills are:

  • Risk Management. With each transaction the investor risks losing only a small part of the capital. In this case, even a series of unsuccessful deals will not be able to destroy his deposit completely. This is the secret of successful risk management.
  • Money management. You should manage your money in such a way that it does not manage your emotions. Losses by trades or during the trading day should be limited. Do not trade when you are unbalanced or ill.
  • Creating a trading strategy. Regardless of your initial results, having a strategy in the long run is essential. 

Decide how much to invest 

At the service of those who are only beginners to investing – demo accounts, where you can fully simulate the real trading process. They are indispensable in mastering the trading terminal, indicators, and the process of opening and closing orders. However, you should not stay on a demo account for a long time. The best solution for a beginner is to open a micro account for real money, which will allow you to experience the emotions of real profits and losses. 

Such services as demo accounts and micro accounts are offered by most brokers. The amount of investment should be such that its possible loss is not critical for your budget. If you are not sure which account to use, start with a micro account. 

Trading on a micro account has advantages for beginners to investing

  • You are already starting to trade with real money. With minimal amounts, you will train your skills and confidence, which will allow you to operate with larger amounts.
  • A micro account limits your losses while giving you the opportunity to test different approaches to trading.
  • With a micro account, you can experiment with the size of your margin.
  • Using small amounts, you can control and diversify your investments. 

Micro accounts are available to everyone and give every user the opportunity to touch the market element. 

Open an investment account 

To open an investment account, you must first choose a broker. Now brokerage services are presented in a huge variety and every beginner trader can choose the best option for himself. Many brokers now support operations on several markets at once. Thus, using only one account, you can perform operations with stocks, mutual funds, bonds, commodities and more. Check with your broker to find out what AI tools they support to help traders. 

You can also use a hands-on or hands-off approach. In the case of hands-on, you make your own trades in the account. In case of hands-off, you entrust the specialists of the brokerage company to make financial transactions. Since in this case specialists will follow a conservative approach, the income will be lower than in case of hands-on approach. But the degree of risk will be much lower.  

Pick an investment strategy 

Investment strategy is the most important part of a trader’s thinking. Investment strategy is not something conservative and cemented once and for all. Rather, it is a set of rules that can change depending on market conditions. Every beginner to investing chooses a personal investment strategy. 

It can be more aggressive or conservative, focused on short, medium or long time periods, including assets of different classes. The main thing is that it should be logical and not contradictory inside. 

Within the strategy can be used differently, including AI-tools. Understand your investment options In order for a beginner to invest to understand his investment options, it is necessary to understand how to use AI. This technology allows you to make investment decisions quickly and do so efficiently. But only if AI is given quality input data to process. Technology such as machine learning refers to a type of AI. 

Thanks to machine learning, the system recognizes true and false data, taking the results of recognition into account when making new calls to the system. This is how the program code is “trained”. Another promising technology for AI-trading is neural networks. On the basis of a large amount of data, patterns are recognized and predictions are made similarly to what the human brain does. 

How to Invest Sensibly, Suitably, and Simply 

These three words – Sensibly, Suitably, and Simply describe the approach that a beginner to investing should use. 

Suitably has to do with the investor’s acceptance of the level of risk. Risk should be neither too high nor too low, and its optimal value for each investor is individualized. 

Sensibly means that you should refuse unnecessary operations during market downturns and base your decisions on facts, not on luck or trust in the manager of a particular fund. And finally simply means that you should understand what is happening in the market and how you and your trading strategy react to it.

Author’s opinion 

To summarize the article, we can say that AI-based tools have already taken their place in the arsenal of traders. Among them there are both paid and free tools with limited functionality. They are not tied to a specific market and can be customized for any market conditions. 

AI-tools cannot replace a trader’s skills and abilities, but they can significantly expand their capabilities. For all those who are beginner to investing, it is necessary to learn what these tools are and how to use them in the market. We hope you found this article useful.