How can automated trading affect the stock market?

The lure of the stock market is hard to resist for the novice and for the expert. The sheer experience of adrenaline rushing through your system as your brain works at breakneck speed to assimilate all the data, numbers and the possible repercussions is hard to beat. While that is the typical scenario in any stock exchange, with the advent of automated trading robots things have changed.

The dependency on automated trading systems has led to quieter floors with software and computer dealing in trillions of dollars every single day. Algorithms have started deciding how a day at the stock market will unfold. The ability of these inhuman machines is their speed to analyze and react to the opportunities that are constantly changing in the trading world. In fact, the dependency on these machines is so much that it is believed that more than half of the Sand P 500 companies trade using algorithms. On the flip side, the speed at which these machines trade often leaves many traders high and dry as they do not have time to react.

While there is no doubt that no human can match the speed of the robot traders it has been seen time and again that complete reliance on these automated systems can prove to be disastrous. Since these systems work on preprogrammed signals whenever the prerequisite is met in any stocks or bonds the systems will start trading which can lead to a freefall in the market. For example, if Dow Jones falls by 3% a particular system will be triggered to sell. The problem happens when several automated systems enter the stop loss criteria the market will be hit in a significant manner. In fact, it is believed that the recent vagaries in the market were the result of algorithm trading.

Analysts have stated that it must be the work of the machines because people don’t liquidate stocks so rapidly; they analyze and then take action.

While trading robots do have their drawbacks there is no denying that they are the future and we have to learn to deal with them like we are learning to accept the digital currency like bitcoin and Ethereum into our daily lives. In case, you want to try your luck in crypto trading then check out Crypto VIP Club. Is it a scam if you ask, you must find out for yourself after reading the review because in this field trust no one but yourself.