Automated trading the death of traders?

[woodenfootspa]

Will automated /blackbox/ mechanical trading eventually kill the need for traders? As you can increasingly program more sophisticated commands into a program would that eventually eliminate the need for traders?

Will the fx market eventually die when it becomes over-crowded? There are so many new brokers and people opening fx accounts that the arbitrage may eventually be completely eliminated

Are any of these DOOM-gloom scenarios possible?

[Rybi87]

Hey man.
Thats an interesting question. Actually, it so happens that lately I've read a really good sci-fi book. The main plot revolved around the so called "Economic Wars". In a nutshell, it was about a world where markets are totally and utterly dominated by highly sophisticated computers, controlled by national governments and banks. Trading became so impossibly complicated that no human could hope to understand even a fraction of what was going on. Also, fundamentals and technicals no longer had anything to do with actual stock price. It was all about immensly complicated calculations, aimed not just on profits from trading, but also ensuring the economical domination of individual countries or unions, by destroying the economy of their rivals, bankrupting or buyng out enemy owned companies, cousing resource shortages, etc.

It was, of course, total mayhem, with economies going into recession and back in a span of days or weeks. Even more destructive than real war, which, by the way, became obsolete

Surprisingly, there were still little traders like us around, just that trading became TOTALLY unpredictible to humans, following no discernible rules, so it became just another way of gambling.

Not a very pretty picture to be sure.

As to your question of whether its possible for traders to become obsolete- I believe not. Small traders are a great source of additional capital and liquidity for larger players . Really, 95% of us are just a source of income for banks and brokers.

And we're all in it in the hopes that we'll one day join the 5% that actually take money from the system, instead of giving it...

BTW I'm new here, so I don't know the rules by heart yet. If its cool to post the title and author of the book, just write me and I'll do it

[daydreamer65]

1984?, Animal Farm?, Star Wars?, Terminator?, The Matrix?

Oh well back to reality, fact is usually stranger than fiction. :lmao:

[Pipcrawler]

In my opinion, I don't see it happening as long as there is market speculation. Big players do not put on big bets on the future totally based on computer models or numbers; there's always a human factor to consider in economics and trading. If it does happen, it probably won't be in our lifetime... and if it does happen in my lifetime, then I guess its back to working my paper route

[edacsac]

I find it an interesting question as well because I'm all over doom and gloom, at least for entertainment purposes.

I don't think that traders wil lbe eliminated fomr the market. From first look I thought "heck ya"! I can code my system into an EA and be 90% hands off. I started just with a simple MA cross, and as I worked, I found more and more variables I needed to calculate to get it to respond like I would - like to momentum and how fast price is actually moving, accounting for large spikes and how it would affect accuracy, checking for ranging/trending and fake outs. Shortly thereafter I said the heck with it. It's easier to open a chart and look.

I'm sure someone could come up witha great EA. It's not going to be an enthusiastic newbie hanging around these forums that can code a bit, but someone with serious AI programing skills and math abilities that would make an average persons head explode. And of course would be programming and testing all the time, so they wouldn't have time to trade.

If a great EA was created, many folks would probably use it. If it became widespread, real live traders would probably gain an advantage because it would be predictable, just like throwing fib lines on your chart and watching a price retracement hit 38% and turn around more often than not.

Not to mention fundamentals. There are folks that just trade on things like GDP, unemployment rates, consumer confidence indexes, war, disaster and what not.

I don't see it happening. Maybe more sophisticated alerts and signals, but I don't see complete automation for quite some time. I'd be more worried about regulatory bodies bumping the little guys out first.

[Marcuse]

Aren´t we in 1984, with all respect but guys.. I seriously think that fiction is not necessarily unreal; maybe you could ask to my friend George Orwell, or perhaps Aldoux Huxley…

[Marcuse]

Anyway, I don´t see traders disappearing as there is a lot of people that would prefer to trade themselves, at least if you lose you have the tranquility you traded yourself, but I’m sure there will be people blaming the Automatic traders, for their bankruptcy