Can Business Intelligence Improve Your Stock Trading Results?

Business intelligence tools are becoming increasingly popular for a variety of reasons, but how can they be used for stock trading purposes? By looking at how these tools work, we can see how they offer a variety of benefits that are worth considering when trying to predict upcoming stock market movements.

What Is Business Intelligence?

Business intelligence (BI) is a term used to describe the way that technology is used to gather and analyze large quantities of data. The results are then presented in an easy-to-understand way that can improve the company’s decision-making process. This includes identifying the latest trends and improving their processes or solving problems.

A variety of tools are now available that make it simpler than ever for organizations to introduce the benefits of BI. They often include features such as reports, graphs, and charts to make it easy for the information to be shared and acted upon. JasperReports Server, Zoho Reports, and BIRT are among the solutions listed among the best open-source BI tools. The emergence of these tools allows smaller companies to use BI, while in the past it was mainly limited to large companies that could afford expensive tools.

In this way, business intelligence has entered the mainstream and is used in many sectors including retail, healthcare, and finance. We can see how this industry is growing by looking at the recent expansion of Customer Insights by Chase for Business. This company is making the platform available to five million small business users at no extra cost.

How Can It Be Used for Stock Trading?

The big question is how a platform that has been designed to improve business processes and solve corporate issues can be used to help you perform better in the stock market. The key is to understand how the data science aspect of BI can help to predict what might happen in the future. Businesses typically use it to analyze data patterns that allow them to forecast demand levels and emerging trends.

In the stock market, there’s no shortage of data for us to feed into analysis tools. In fact, understanding the numbers to make better decisions has long been one of the key aspects of stock market investing. However, in the past, this meant studying paper documents and crunching the numbers manually in a long and time-consuming process.

With stock market trading now conducted online and instantly, it’s reasonable to expect that the analytical work can also be carried out more efficiently. By using an AI-driven BI tool, we can look at possible future trends based on real historical data without wasting any time.

What Trends Could BI Identify?

A simple example of how this might work is by identifying the times of years when a certain stock tends to gain value. Let’s say that it’s a business that tends to enjoy a strong end to the year which leads to its profile being boosted at this time. This information is invaluable in determining when to buy and sell the stock.

Another approach could be to feed the tool the relevant data that lets it calculate whether a certain stock is worth buying or not. This would allow the investor to compare different options before deciding which stock to choose. It could prove to be a powerful way of seeing when the time is right to sell a stock that could be on the wane due to issues such as worsening market conditions or increasing competition.

Does This Guarantee Profits?

It’s easy to look at the output of a business intelligence tool and believe it to be the gospel truth. However, there are too many factors and variables to take into account to assume that this approach is going to guarantee profits on the stock market.

The first point to consider here is that the quality of the output is only going to be as good as the quality of the data that’s been input into it. It’s unrealistic to think that you can hope to have all of the necessary information to understand exactly what’s going to happen with the market as a whole. The area of market volatility is another concern, as prices can move extremely quickly in certain circumstances.

We also need to consider the areas that are outside your control. You might identify an area where you feel that a certain company is going to make huge profits in the near future. But what if their rivals are also using data analysis and discovering the same results, giving them a chance to react quickly and turn the market conditions in their favor instead? This look at the competitive nature of AI startups reveals how it can be difficult to predict who the winner will be in any business sector.

There’s no denying that business intelligence is a great tool for understanding what might happen next in the business world. Yet, we need to be careful to accept its limitations before using it to try and make a profit on the stock market.