The rapid advancement of artificial intelligence (AI) in the financial sector could be an exciting edge for investors, but many individuals might not know the market is already invested heavily into AI trading technology.

Yvette Schmitter, co-founder and managing partner of Fusion Collective, an IT company specializing in AI and computer technology, explains that AI has been a part of the financial industry for years, long before the public became aware of tools like ChatGPT.

“Hedge funds use these huge super-fast computers like having fleets of robots watching the market nonstop while you’re sleeping, those robots are working,” said Schmitter. “These robots spot tiny little patterns and prices and jump in to buy or sell in a blink of an eye. So just imagine, you know, regular guy or gal sitting at home, you know, trying to, trying to play the stock market. You’re already behind the eight ball.”

While AI-powered platforms marketed to individual investors may seem appealing, Schmitter urges caution.

“There are some platforms out there that are claiming that they’re seeing great returns from their AI platform… read that fine print, you’re going to find that it says results are not actual. They are hypothetical,” said Schmitter. “We are looking for that easy button… they’re not even like gut-checking it, they’re not even like doing their own little research. They’re not even thinking like, does that even make sense?”

She warns that blindly trusting AI-generated information without proper vetting can lead to significant risks and the lack of transparency in AI models is a major concern.

“Many of these models operate in like a black box where it’s hard to understand why a trade is being recommended. We’re relying on something that you can’t fully explain which can lead to some unwelcome surprises,” said Schmitter. “These data sets, they’re like scraping Reddit, scraping the internet, you’ve seen what’s on the internet, right?”

The Addiction Factor

Experts are drawing parallels between trading and gambling addiction. Abdullah Mahmood, a problem gambling counselor, specializing in addiction, at Maryhaven in Columbus calls it “problem trading.”

“We have seen several clients… this past year who have come in for financial market trading,” said Mahmood. “They made that connection along the line of, OK, this is gambling adjacent behavior.”

The accessibility of trading apps on smartphones has exacerbated this issue, especially when options trading .

“The house always has an edge,” said Mahmood. “People do this for a living, but not everybody lives on Wall Street or can work on Wall Street. This person has, you know, [now has] trading capability in the palm of their hands.”

The risk and reward: “A compulsive gambler, as I would call it now.”

Once a successful entrepreneur, Doug Royer lost over half a million dollars through trading stocks and options. He used money from selling his business and his house. Royer started chasing his losses. Royer’s story serves as a stark warning.

“I did make a lot of money. I basically grew my portfolio about 3 or 4 times,” said Royer. “It takes money to lose money. I didn’t do the best with what I had been fortunate to make with a successful business.”

Royer is now seeking problem gambling treatment at Maryhaven.

“I mean, your world crashes when you realize you’ve lost so much money in a short period of time,” said Royer. “I was getting kind of frustrated that my initial stock picks… I wanted to try and make up for losses and that’s when the option came in.”

Expert Advice

“There’s a subculture around this, so people are trying to get in the game by reading threads on Reddit, like Wall Street bets and so on,” said Mahmood. “Not the lay person can make a lot of money off of this without the advice of somebody who has some sort of financial expertise, so always talk to a planner, and have somebody manage your portfolio for you.”

 Call or visit for help Ohio Problem Gambling Hotline: 1-800-989-9966.