Why does the system need coffee, or has the human not arrived to clean the desk yet ?

You can get a computer to do things Quicker, Cheaper and more Efficiently than any human. Algo's and trading efficiencies have been around a while now, but with the new regulatory demands in the industry it only makes sense to reduce your exposure to risk by removing the potential human error or worse still human fraud by having a computer execute the order. At the end of the day a computer can only do what it is programmed to do, as long as the script is written in such a way that it executes in sync with the demands of the market I fail to see any downside.

No disagreement with the point, however, there is usually a counter, albeit niche, opportunity with disruption. What is the creative opportunity afforded this continuing trend? It's usually higher up on the value chain. For instance, robots replacing humans in auto manufacturing led to robotic design, software and information management needs. Something to ponder!

James, sorry, my comment was aimed at the overall article but I posted to your thread. Your points were excellent.

As someone who has developed software in my career there is a major point you make. '...as long as the script is written in such a way...'. I would add, and thoroughly tested. Software can execute at a volume, speed and consistency no human can. If the code is correct that is a beautiful thing. If the code is flawed then extreme damage can happen quickly. However, someone else likely has code (and a model) to catch those failures as an opportunity. Look for Process, Data Management and Data Quality to make or break firms in the future.

As a question who is going to be supplying these ' toys ' their liquidity to make this ' guaranteed ' profit ? HFQ and Algo's have been the bane of LP's for years. Banks currently whinge when clients make money from their liquidity and have their own ' counter toys ' that widen their prices to avoid loss from profitable customers. Surely these new money making machines would find it impossible to make money as their tradable spreads would be wider than Travelex prices at airports !

I'll take objective rules-based decision making over subjective approaches any day.

My2c .. market exist due to human needs. Taking human out of the equation , the market will eventually collapse. AI can only be supporting cast , isn't that's Javis role.

i thought they were already? lol

Will never happen!

I Agree with Jason. A market that has humans out of the equation, is just a game. It's no longer a market when sentiment can't be decided by human emotion.

Until AI develops the pragmatic processes needed to code new trading software applications, we don't have to worry about humans being excluded from the process. Humans are developing the algorithms to exploit directional moves in every market they are applied to. So becomes the nature of the beast. The better humans become at "reading" market direction and movement the better these AI's become at extracting profits from these excursions. Human's order entry skills, reading skills, interpretation skills and reaction times are vastly more inferior than well written AI skills could ever become. One of the greatest problems today is that humans are fighting humans inside this environment. Humans supplying the data are continually striving to make it harder for those creating algorithms a level playing field to extract profits.

Add Blockchain to the Clearing Settlements space to complete a near zero touch STP landscape!

algorithms work till they don't. need a human to turn off machine

smartest people in the room are never as smart as they think they are. think long term capital management or https://www.amazon.com/Quants-Whizzes-Conquered-Street-Destroyed/dp/0307453383

Maybe in 100yrs.

About freakin time!

Maybe fund management or currency hedging at institution levels and the like, but I don't believe in the elimination of human traders. Market movement is driven in part by human characteristics: emotion, reaction to technical patterns and signals, and individual rule sets that include various degrees of confluence, money management and risk appetite. Without any human influence, I think trading would die on the vine.

It's not just traders, it's people everywhere. Arstechnica has a great article on a guy who's observing that space visually: https://arstechnica.com/business/2017/02/how-being-replaced-by-a-machine-turned-this-graphic-artist-into-an-activist/

Perhaps a hybrid model works best. Here is a quant I made for a very low development budget. Sometimes I will exit trades for the quant, other times I let the quant handle the exit. It works well. http://www.myfxbook.com/members/fxprofitasia

In a free market with governance will always outpace flash boys . decimate dark pools and send AI broke .Its called the swarm intelligence..

I built code around this very idea in 2006, the only reason traders are not already replaced is, tradition. Paying traders millions of dollars per year is no longer required.

Joe Beattie - Algorithms built in unstable, imbalanced and inconsistently built trading environments cannot doing anything but fail over time. I'm not talking about HFT's either on the other side of that story as well. One single highly intelligent ant can feast for a lifetime and go completely unnoticed, in the right environment.

It's not happening. If all trades would be efficient, who gonna lose. There is a loser for every winner.

The reality is that all trading should already be systematic and automated. In which case, your staff should be doing research to develop or improve trading models, as well as tracking performance of existing systems to ensure they are performing properly and minimizing slippage. The "star" seat-of-the-pants trader making (and losing) millions is just a taking big bets that sooner or later will go sour.

change..

Define Trader ! ... if it's really taken huge investment in smart computers to understand the market trend since 2008 .. then I'm a Dutchman !! ... will be interesting when all humans have left the market and the machines just land up analysing their own trends .. Return NAN!!

Ummm--hasnt this been going on since DMA started 20 years ago? I think a better statement could be that AI is replacing active strategies entirely.

My thoughts would be it's nice in theory - and spouted as such by the algorithm developers. Trading comes from effectively exploiting inefficiencies. In practice as computers take over I suspect they would all be feeding off each other as the inefficiencies diminish. It's a zero sum game at the end of the day. Trends would perhaps cease to have any meaningful link to fundamental reasoning. Wilder market swings would become the norm and the average Joe investor will shy away from fear and lack of understanding. It's already happening, they instead flock towards real estate and build price bubbles there. Which cannot go on forever while job uncertainty also grows with technology taking other jobs no matter what the supply/demand enthusiasts like to believe. It will create a few more super-rich tech & property developers along the way but I can't see it ending well for the 99.9% who aren't

Computers dont have animal spirits!

I've read that kind of article for the past 25 years! When computers understand Fear and Greed then maybe they will have a chance.