How I Use AI in Trading

AI is not a trading edge. Anyone who tells you it is, is selling you a magic box that doesn’t exist. They sell you the idea of a prediction engine, a shortcut. It’s a lie.

The market is adaptive. The moment an AI finds a "reliable" signal, that signal is hunted, arbitraged, and killed. So no, AI doesn't replace you. It replaces the wasted hours. It replaces the endless scanning and the information overload that drains your discipline before the bell even rings. Used correctly, AI makes a good trader faster. Used incorrectly, it makes a weak trader lose money with more confidence.

First, I use AI as a filter. Most traders don't lose from a lack of ideas; they drown in too many inputs. They stare at watchlists and news feeds until they’re too fatigued to execute properly. My AI filters the entire market for anomalies. It flags unusual premarket range expansion, volume spikes against the 20-day average, and abnormal options flow. It doesn’t give me a trade. It just points and says, "Look here. This is behaving abnormally." The rest is my job.

Second, AI is for compression. The market doesn't wait for you to read the news, the filings, or the earnings call transcript. By the time you're done, the move is over. I use AI to compress all that text into what actually matters. What changed? What are the key risks? How are participants positioned? This saves me hours and preserves my mental capital for what matters: execution. I trade the reaction, not the headline. AI helps me understand the context behind the reaction, fast.

Third, I use it for stress testing. The biggest losses come from surprise. A trader enters a position with one scenario in mind: "It works." Then the market gaps, liquidity vanishes, and volatility explodes. Panic sets in. Before I take size, I use AI to map the other scenarios. What if volatility doubles? What happens if a key level breaks? It forces me to be prepared for what could happen, so I don't react emotionally when it does.

Last week, my filter flagged a stock showing unusual strength against a weak market, with a spike in short-dated call volume. The AI didn't say "buy." It highlighted an anomaly. I applied my framework, identified the structure, and defined my invalidation. The AI generated the attention. The framework confirmed the trade. If you can’t explain the trade without the AI, you don’t take it.