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Artificial Day Trading: How Robots and AI Will Changing Wall Street


Look at any successful financial portfolio and what do you see? You probably see what can only be the hard work of dozens of advisors, day traders, CEOs, and investors. Building wealth through sound investments takes patience, persistence, and dedicated experts. Wall Street is no exception to technological advancement, though. Whereas once eager traders thronged the floors of the stock market, robots have started to rule the roost. The world’s financial markets have changed considerably because of technology. Its presence will undoubtedly remain a staple of Wall Street from here on out. What does this mean for the future of your money? How do artificial intelligences and robots factor into the business of investment?

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Ways Robots Have Entered the Market

It’s no secret that automation and analytical computers have permeated every facet of the modern world. Given how important Wall Street and the stock market are to the global economy, it is necessary to have technological safeguards in place. Regulating data mitigates the effects of financial anomalies that can occur.

Robotic day traders have now replaced a sizable percentage of their human counterparts. These artificial replacements can analyze complex data on the fly in order to determine the best courses of action for particular markets. Financial institutions and trading firms have started using these technological advances to prevent extreme events. They contribute to global economic stability, especially in volatile markets.

Authoritative voices in the world of economics cite the 2008 financial crisis as evidence of how automated analyses can improve markets. Whenever structures of power impose regulations on an industry, members of that industry seek ways to innovate and to exploit loopholes. Experts argue that introduction of a contrarian system of analytical intelligences may act as a way to deter these circumventions by private businesses.

Massive firms such as JPMorgan Chase & Co. and Goldman Sachs plan to implement new systems in the near future. JPMorgan’s LOXM program handles equities exchanges so well that it has already started replacing human beings who used to do the job. By some estimates, the innovations coming down the pipeline in the financial industry could eliminate 30% of banking jobs in five years.

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The Dangers of Robotic Financiers

Though automated traders have their benefits, there are those on Wall Street who view the use of robots on the trading floor as catalysts for disaster. The United States Securities and Exchange Commission fears the use of extensive automation in the stock market. They claim that algorithms used respond to the trends happening on the floor. These exchanges often fail to take into account the price of particular stocks or how much it sells in a set amount of time. Oversights such as these can cause economic indexes such as the Dow Jones Industrial Average to plummet in a matter of minutes.

Passive funds of the kind that rudimentary robots now manage typically follow the trends of active funds. It is the active funds that hold the most sway. They run on algorithms just like much of modern Wall Street. Yet, they have the ability to make decisions on when to buy or sell. If something goes wrong, humans are merely damage control.

Human capital stands to take a large hit on Wall Street, as well. With the implementation of more advanced algorithms, several consulting firms estimate financial sector could lose as many as 90,000 jobs by 2025.

How do you feel about the rise of automation in the financial world? Do you think that Wall Street owes it to investors to keep people on the trading floor as opposed to relying on artificial intelligence? How do you think that robots could impact the future of the economy if they’re allowed to monitor and control the financial futures of multinational corporations? Share your thoughts and let us know what you think.


What Do You Think?

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