A time will come when human trading will become obsolete, with algorithmic, or robo, or the so-called black box trading tacking its place. Why take the time and analyze the market direction when you can have a high frequency robo-trader which takes advantage of pockets of liquidity and scalps a few pips out of the market ? Some recent examples include the May 2010 Flash crash when the DOW slumped for more than 1000 points as what seems to be the result of high frequency trading and algorithmic trading. What happens if there will be an error in the Matrix again ?
Is algo-trading too much to fast?
While some may argue that high frequency trading and the various trading robots add liquidity to the market by engaging in trading arbitrage, under the assumption that they are market neutral (acting as a market maker), others believe that this type of trading adds to the volatility of financial instruments. Moreover, nowadays more than 60% of the daily volume on the NYSE (New York Stock Exchange) is accounted by automatic trading. A comprehensive list of examples from Zerohedge here.
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