Fully automated transactions for millions of dollars, a financial system that functions by itself, without human intervention - such a future is becoming more and more real. To increase their chances of success, large funds and private investors resort to the help of exchange algorithms. Meanwhile, the robots on the stock exchange have a double reputation. On the one hand, the demand for them is actively growing. According to the consulting company Deloitte, by 2025 the volume of assets managed by trading robots will be $5-7 trillion. On the other hand, automated systems are not immune to errors and, in the hands of an inept investor, can do more harm than good. Speculators and assistants A trading robot is a special program that can automatically manage an investment portfolio.
He analyzes the situation on the market, places orders and makes transactions according to a programmed algorithm. Typically, virtual traders are associated with scalping - fast transactions with small profits. Meanwhile, trading robots can be used on different instruments and time intervals. It all depends on the trading strategy prescribed in the algorithm. “Trading robots can be divided into two categories, these are high-frequency or HFT robots. They are hosted on the servers of the exchange itself and are connected to it through specially dedicated gateways. Such robots earn at the expense of high speeds on the difference between supply and demand.
They can be conditionally called "high-speed speculators." The second category is robots based on technical, fundamental analysis and other data. They allow you to choose and customize your trading tactics from a wide range of scenarios for stocks, futures and currencies. Robots can independently trade on a timer, automatically place protective orders, use money management methods, and also stop trading based on set limits. All of the above takes a lot of time for a person, and a robot assistant does it in seconds.” A distinctive feature of trading robots is the strict adherence to the underlying algorithm, so they do not make human mistakes. Emotions like excitement and greed, doubt and panic are alien to a virtual trader.
In addition, they can analyze large amounts of data (archive of stock data, analytical indicators, trend type) so that an investor can make a more informed decision without manually tracking charts and indicators. They also help to exit the game in a timely manner and fix profits using such tools as target orders (take profit) or a set of trailing stops. “Robot traders have several defense mechanisms, so it is quite difficult to lose your money. Six months ago, about 3% of users could be left without a deposit. Basically, these are clients who, not understanding trade, begin to engage in amateur activities. For example, close deals on your own when you see that they are in the black. Thus, the entire algorithm of work collapses, and, naturally, this leads to losses.
I am glad that we are seeing an increase in the financial literacy of the population, and such unpleasant situations are becoming less and less.” Meanwhile, it is also not recommended to fully rely on artificial intelligence. Trust but check Any investment activity on the exchange is associated with risk, and the operations of trading robots are no exception. Virtual traders have repeatedly "drained" multimillion-dollar deposits due to bugs in their work. For example, in 2012, the American broker Knight Capital lost about $440 million due to a trading robot. It simply placed as many orders in half an hour as it should have placed in a few weeks. The “flash crash” in May 2010 in the United States and the crash on the NASDAQ before the start of trading in Facebook shares were also caused by robots.
Of course, algorithms have improved since then, but even today, only a few trading robots can boast of having artificial intelligence (AI). The vast majority of robots operate on the basis of an algorithm set by the developer according to a specific scenario. A large number of these scenarios can be built into the trading robot, but the investor must understand in what situation to apply this or that tactic. Indeed, in case of failure and a lost deposit, he himself will be to blame. Developer companies avoid giving financial guarantees, limiting their liability to the performance of the robot. “The investor has a chance to recover losses if his financial losses are related to an error in the software of the trading robot. At the same time, you need to pay attention to the terms of the agreement between the developer of the trading robot and the investor.
For example, the condition that the trading robot is provided “as is”, with all shortcomings and errors, may weaken the position of the applicant. In court, the investor will need to prove, including with the involvement of an expert, that the transactions on the stock exchange, which brought him losses, are connected precisely with an error in the coderobot software. In addition, the financial market is constantly changing. Changes can be either global (asset correlations or reactions to certain statistics) or minor (adjustment to volatility). To work correctly, a robot trader must constantly “upgrade their skills”. Moreover, even without global changes in the market of trading robots, you still need to improve. Microchanges tend to accumulate, as a result of which a previously working trading system may eventually become unusable.
“At least once a quarter, we release new updates that improve the trading algorithms. Before releasing the robot for sale, we test it for a long time on our own accounts.” The infrastructure of the exchange is also constantly updated, and robots should not lag behind it in its development “The Quik trading terminal changes periodically, especially in the last year or two. Because of this, many robots stop working. They need to be supported, adapted to the new version of the terminal.” .