What is a trading robot: definition and functioning

Trading, which was originally a profession dedicated to the professional trader, has become an accessible profession, provided that one has some knowledge. The profession of trader was idealized in the 90’s, due to the fact that it was possible to create a fortune in a short period of time and the trader’s coolness.

Since 2018, new technologies have taken place creating automated trading robots and threatening the place of the human in this market.

Today, between 60 and 80% of algorithms are automated, automatic trading represents a real revolution although it still has its limits

that should not be overlooked.

However, we can see that traders now favor automatic trading, but is manual trading really on the way out ? This is what we will try to explain to you !

Are trading robots more efficient than humans ?

Hit hard by the crisis, the banking and finance giants are looking to reduce their payroll. At a time when departures are multiplying, the market continues to live. And these departures are compensated by the acquisition of trading algorithms that are more efficient and profitable.

It should be noted that automatic trading represents between 60 and 80% of the transactions on the market. It is therefore easy to understand that trading robots are prevalent in the market.

It is true that there are many advantages to opting for the trading robot solution. One of them is the fact that it is completely devoid of feelings. Indeed, the robot does not feel tiredness or emotions of any kind, which is not the case with a human being. Its conclusions cannot therefore be influenced by personal or emotional facts.

Note also that the trading robot is faster and more accurate. It performs about ten calculations per second, which a human being is obviously unable to do, which allows it to better evaluate opportunities in the stock market and to act at the right time while managing the risks with precision.

Thus in recent years, technology has repeatedly outperformed experts who have spent their lives perfecting their knowledge and experience.

Automatic trading will never replace humans

There will always be a need for human expertise in trades requiring a certain technicality such as structured products.

Trading robots are still obedient, they need to be programmed beforehand, without which they cannot act. We tell them what to do and how to act, but they have no conscience of their own and even less emotional intelligence than a human can have.

We can see that robots sometimes face malfunctions where in this case they cannot act alone.

In any field, a robot will always need a human to program it. The market can sometimes face changes, which require new programming that only humans can do.

Let’s not forget that trading can be a passion, and that not every trader needs to opt for a trading robot for several reasons, including the fact that it can be expensive.

In conclusion ...

We can see that young people do not want to become a trader anymore, they think more about creating startups rather than gambling which can sometimes represent risks.

We can also note that robotization does not only affect trading. It will occur in all professions and will develop again and again.

But a robot cannot replace a human being in any profession. As for trading, the robot is programmed, and to program it, it needs humans.

Finally, what we can say is that machines are there to complement humans, not to substitute them.


Did you know ?

« Traders and salesmen are increasingly deserting the trading rooms of the world’s major investment banks. »

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