Automated system's taking over the market moves?

What is your opinion on the growing number of traders using Automated system’s and such ? Previously, the market was 100% human psychology.

Now the entries and exits of the trade in a large percentage of systems governed by Algorithms. Do you think it will be possible to use a trading system based on human behavior in the future ?

P.s - This question was asked by someone else . I just wanted to know your opinion’s…

Well, my opinion:

There is one dimension of trading that is governed by automatic systems (quant arena) and another governed by human trading.

There is room for both.

Each human behaviour and appreciation of objective realities is different and that triggers diversity in decisions. Also there is probably diversity in algo trading designs depending on their creators.

I dont have much knowledge on algorithmic trading but I am under the impression that any automated system was created by man. That man created the system based on his emotions and what he thinks the markets will do. So IMO you will never get the psychology of trading out of the markets. In sense it will not make a difference.

This would not be practical to depend on such algorithms. From my all experience i can say that there is no standard rule in Forex trading. I recommend you should depend more on manual trading. It is true that you would not get quick result as there is possibility to do mistake more but the experience you gather would be valuable.

Manual trading is the only way you are ever going to learn anything about the market. Some of the automatons out there are nothing but scam bots and FYI, all the bots out there have been coded by humans so yeah, there’s that to take into account.

Well, that is just how it evolves. Yes, I believe more traders use automated scripts just as there is automation in other industires and at home as well. Automation have always been praised as it saved time that you need to spend on a task and the results are more consistent. So why not using it for something delicate as trading too. And as automation is a step forwards, so is the quality of scripts also evolving. So yes, I think there will be systems that trader as humans. The first crude step is already there, as humans made the script.

I don’t see why it should not be there.

Of course, the basic structure is already in place but as to the efficacy in coding one, well, that’s a different story altogether. And yes, at some point in the future, we may see automated scripts that trade more intelligently than humans do and as always, the market will adapt to these changes.

Scripts and manual trading will ALWAYS have to change going forward. if for example someone published a perfect script and then everyone started to use it, how would anybody make money? well they wouldn’t because there always has to be someone on the other end of the deal taking an opposite position. This rather oversimplified example does serve the purpose of proving that in the long run trading will have to continue to adapt and that there has to always be some variance in trading methods in order for the market to exist.

If anything it might make the market more predictable, if you were just trading against robots it’d be like dodging the spot lights in Metal Gear, no?

That is the nature of the market in a nutshell. It only exists through competition, and it evolves constantly. Forex today is almost unrecognisable to forex ten years ago. take for example the decline of carry trading. This may return, but it is a prime example of the evolution of the market.

I believe that it is equal to getting artifical intelligence work, which I believe won’t happen in foreseen future. Automated systems can certainly be coded to be profitable, but human mind would/should probably beat them in theory. This is not chess where all board and position is visible (although even there you can win computer if you play correspondence), forex requires qualities like perception, adaptability and making judgements in unclear situations. Just like in games like go, bridge and even poker humans still have an edge and will keep it for some time.

Methodical trader uses many nuances that can’t be so easily coded to make a system . Even if entry can technically be defined very precisely, how will the automated system will know that there is time to exit? Where to put stop loss and how to change sl/tp during trade.

Bots automate human decisions. I think their main advantage is in speed, but their decision-making process has been made by humans, so you are still dealing with humans.