AI Trading | Best AI Trading Platforms in 2021

Two of the most important factors that determine your success as a trader are a good strategy and fast execution. With an AI trading platform, you can ensure you have both of those bases covered.

AI trading allows you to automate your trades so that a bot automatically buys and sells assets for you when specific conditions are met. You can trade much more than just stocks, too; most AI trading platforms support trading currencies, commodities, and more.

If you’re interested in automating your trading, this guide will cover everything you need to know. We’ll review four of the best AI trading platforms on the market in 2021 and explain how AI trading works in practice. By the end, you’ll be able to make an informed decision about whether AI trading is right for you and which brokerage to use.

How to Start AI Trading in 3 Quick Steps:

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The Best AI Trading Platforms in 2021

To get the most out of AI trading, you need a brokerage that’s trustworthy, inexpensive, and packed with tools for researching assets. With that in mind, let’s take a closer look at our four favorite AI trading platforms in 2021.

What is AI Trading?

AI trading allows you to harness the power of artificial intelligence to execute your trading strategy. For busy traders, AI offers a way to speed up trade execution so you never miss a price movement. AI trading platforms can also learn from the success and failure of past trades to build a better trading strategy.

How Does AI Trading Work?

AI trading relies on computer algorithms that are constantly scanning the markets to find specific conditions. These conditions are defined by you, the trader, and they’re typically founded on a combination of technical data analysis and fundamental parameters.

For example, in the stock market, you could have an AI bot search for stocks rather than a stock broker to trade based on indicators like the Relative Strength Index and Moving Average Convergence-Divergence. When these indicators each reach a specific value, the bot will trigger a trade on your behalf. 

Depending on your strategy, an AI bot may be looking only at the stock market or gold market, or it may be looking across multiple asset classes. The advantage of this is that you can buy and sell whenever opportunities arise, even if it’s impossible for you to be monitoring every asset being traded at the same time.

What are the Benefits and Risks of AI Trading Bots?

What Assets Can I Trade with AI Trading Bots?

AI trading platforms allow you to trade nearly every major asset class and financial instrument. Let’s cover some of the most common assets that are traded using AI bots.

Stocks and ETFs

You can trade stocks and exchange-traded funds (ETFs) using AI bots just like you would with a regular brokerage. Most AI trading platforms allow you to own your shares outright, which means that you’ll receive dividends if your stocks pay them out. However, be sure to check this, as some AI trading platforms offer stocks through CFDs rather than direct share ownership.

The range of stocks available is also important. Most US-based trading platforms allow you to buy any stock listed on the major US exchanges, the NYSE and NASDAQ. But, if you want to purchase international stocks, you’ll need a brokerage that includes offerings from the London Stock Exchange, Toronto Stock Exchange, or Tokyo Stock Exchange.

Forex and Cryptocurrencies

AI trading is extremely common in foreign exchange and cryptocurrency trading, since these disciplines require traders to capitalize on very small price changes. The biggest difference among brokerages is what types of currency pairs they offer trading around.

Most AI trading platforms that allow forex trading offer major currency pairs. These account for most of the forex trading that happens each day, and the pairs are dominated by the world’s major currencies: the US dollar, the British pound, the Euro, and the Japanese yen. Minor pairs typically involve trading between one of these major currencies and a less common currency, like the Australian dollar. These, along with trades between two minor currencies, are only supported on a handful of forex brokerages.

Cryptocurrency trading has become increasingly popular as Bitcoin, Ethereum, and other cryptocurrencies have grown in value. Cryptocurrency trading works essentially the same as forex trading, except that most brokerages only allow US dollars to be used as the real-world currency in trading pairs.

CFDs

CFDs enable you to speculate on the future price of an underlying asset without actually having to own it. CFDs are frequently used for commodity trading, since they give you exposure to the gold, silver, oil, and wheat markets without actually forcing you to ship and store these products. 

However, CFDs are available for almost every type of asset, including:

• Stocks and ETFs
• Stock indices (e.g. the S&P 500)
• Agricultural products (e.g. corn, wheat, soybeans)
• Energy products (e.g. crude oil and natural gas)
• Precious metals (e.g. gold, silver, platinum)
• Currencies and cryptocurrencies

What Fees and Commissions do AI Trading Providers Charge?

The types of fees that AI trading providers charge varies among platforms. However, there are a few common ways in which these platforms make money.

Spreads

The most common tool that AI trading providers use to charge traders is the spread. This is the difference between what you can buy, say, a stock for, and what the seller receives for it in return. Usually, the spread is just a couple cents, but in percentage terms, it can be anywhere from 0.1% to more than 2% of the total value of your trade.

So, the spread is essentially a commission on sales. While it doesn’t change from minute to minute, the spread isn’t fixed at most brokerages. Notably, spreads tend to increase outside of normal market hours since there are fewer people trading.

In general, you’ll want to use a trading platform with the lowest possible spreads. This reduces the amount you’re paying in indirect commissions every time you buy and sell assets.

Trade Commissions

Another way that AI trading platforms can make money is by charging trade commissions. This may be in lieu of or in addition to the spread, and it can be a flat fee or a percentage of the total value of your trade. Either way, having to pay trade commissions means that you’re paying both to open a position and to close it.

Keep in mind that brokerages that charge commissions aren’t necessarily more expensive than ones that rely on spreads. Paying flat-fee trade commissions rather than a variable spread can actually be beneficial if you typically place a few large trades as opposed to many small ones.

Fees

Unfortunately, many AI trading platforms charge additional fees outside of trades. Inactivity fees, which penalize you for not placing a trade (and paying spreads or commissions), are common. Deposit and withdrawal fees are also frequently assessed.

Traders should be especially wary of overnight financing. This applies when you open a position with leverage and then hold it overnight. Keeping leverage overnight is essentially like taking out a loan, and fees can be several percentage points of your trade’s value.

What Should I Look for When Selecting an AI Trading Site?

Now that you know the details of AI trading, what should you be looking for when choosing a platform? Here are some of the top things we recommend:

Asset Variety: Having a wide variety of assets available for trading ensures that you can take advantage of opportunities across asset classes. You also won’t need to find a new platform if you decide to try out commodity trading or forex trading in addition to stock trading.

Low Fees: High spreads and trading commissions can make it harder to profit on trades, since you start off every position with a loss. Look for trading platforms with tight spreads and no trade commissions.

Leverage: Leverage allows you to maximize the value of your money by taking out a free loan from your brokerage. Just make sure that you close out trades the same day so you’re not hit with overnight financing fees.

Research Tools: Developing an automated trading strategy requires a strong understanding of technical patterns and past price history. The stronger your platform’s research and charting tools, the better positioned you’ll be to create a successful strategy.

Demo Mode: Before you unleash an AI bot to trade your money, it’s essential to make sure it can trade profitably. Having a demo account mode allows you to do this without risking real money.

Regulation: AI trading platforms should be regulated by a major licensing body. If you find a platform that isn’t regulated, steer clear; you shouldn’t trust that brokerage with your money!

Customer Support: While you’ll probably never need it, having a customer support team available is extremely helpful if something goes wrong with your account. Most reputable trading platforms have a team on standby for questions at least five days a week.

Conclusion

As computing technology gets better, AI trading platforms are popping up in more places and offering ever more asset classes to trade. The bar to trading with AI is lower than ever before, which is good news for traders who want to find every opportunity for profit.

Thanks to our guide, you have the information you need to decide if AI trading is right for you. Plus, with our reviews of the top platforms, you can pick the best one for you and get started trading today.

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