What are computers' limitations in today's market?

J Livermore

Active member
102 30
I was wondering what the ability of trading software is like these days. Specifically is everything automated or can people overrule their machines before a trade is placed?

As the years go by, computers will keep getting smarter. Are they near the point of replacing the trader entirely?

From what I read a few years ago, computers are not good at fundamental analysis except maybe as a screening tool. Is this still true?



Active member
131 24
There are there levels of trading automation existing nowadays:
1. Screening. This is something like advanced filters, when the system conduct search for specified setup and inform trader when in takes place, so the trader need to make a decision.
2. Semi-automated trading - the system not only find setup, but also open the position according to trading rules. In such case, the system has to calculate the risk per trade and proper position size, while the trader would watch position and close it manually. Similiar principle is the most wiely spread, as it is used by institutional players when they need to get relatively large position. They just set the price and computer would buy or sell as close to that price, as possible.
3. Automated trading, when system itself open and close trades without any human interference.

Most of such tools are based on Python, which is the best solution for this purpose. In fact, you can use Python scripts to do almost anything including analysis and backtesting, but it coul be difficult for most of the traders so they would rather use special software with graphical UI (for example, Forex Tester for backtesting).
If to speak about the fundamental analysis, the computers are widely used to collect and compare data from the earnings reports. For exapmle, you can download data for 2 years (4x2 quaterly reports) and compare main metrics. Computers also could perform contextual analysis calculating the number of positive and negative words to define whether the news are positive or negative. These are the most complicated systems, and they could possibly improve with the development of AI and neural networks.


Legendary member
14,442 1,524
If computers can now beat world champions at chess and Go you would think stock picking and good analysis would be right up their street.
Of course there is a veil of secrecy by the big players able to afford expensive AI, so the general public is excluded there.
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