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How much of trading has or soon will be fully automated?

I know that high-frequency trading has been completely adopted by investment banks and at least a large chunk of the investing world as a whole, but I was wondering how much of the decisions still remain to the traders. Since hedge funds hold portfolios instead of strictly dealing with stocks, how much of it is becoming automated? I'm interested in the career prospect because I am fascinated with markets and want to become a part of it, but I don't want to simply become a computer scientist creating algorithms and not actually getting my "hands dirty."
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Austin’s Answer

Joseph, great question. I will begin by saying that I do not work in finance so don't take my word as the word of god when it comes to the impact of automation on trading. I am sure you are well aware of the massive impact that AI and machine learning will have on the workforce in the next few years and it should not be underestimated. AI will be able to construct portfolios by assessing the historical performance of individual stocks as well as analyze the market real time and the potential fluctuation on price and such. AI will be able to predict movements in price and adjust accordingly far better than a human being (unless that human being has inside information of course).


Nonetheless, there will always be a need for people in the financial sector. Meeting clients, managing a firm, talking to investors, and many other aspects of finance cannot be automated. Gone are the days of being on the trading floor yelling over hundreds of others on Wall St, but there is nothing wrong with that; progress and change should be welcomed and not feared. While finance related jobs have changed, you will still be able to be directly involved in the markets should you find yourself a job in finance. Traders on the floor at Wall St still do exist, but automation will decrease their number via automation of investing through AI and machine learning. Look to couple your passion of finance with business management, this will better equip you to land a job in the financial sector. Big financial firms exist to this day for a reason with staff in the tens of thousands so this should offer you a degree of comfort.


I hope this helps!!


Best,

Austin

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Henning’s Answer

Joseph, this is a great question and I would be curious to hear what career you have decided to pursue. While it is correct that a lot of trading in financial markets has been automated, you'd be surprised how much human element is still involved. It really depends on the product. As you'd expect, the most liquid products - stock & futures trading - are the ones that are getting automated. However, there are other products such as derivatives (in all asset classes) that are much harder to automate and where a lot of human judgement is needed. Overall, you can still have a fulfilling and interesting career in this field but you have to be careful which product area you chose. A more quantitative background is definitely helpful. In addition, a career start in sales & trading can also be a great way to get into the investment management industry.
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Donal’s Answer

Day trading or high frequency trading has almost entirely become the domain or the computer algorithm. So I would avoid this area if you are not interested in computer science. However there is still a great deal of human interpretation and decision making where it comes to allocations for pension funds and asset management in active portfolios in general. These take much longer term views and would suit what you are looking for more.
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