By Rob Colville on December 20, 2017 in
They say that the world will slowly become completely automated and that even the most advanced of jobs will be able to be done by computers. However, when it comes to trading, is mind or machine better? What is more effective at analysing the markets and making the right choices in Forex trading?
The free markets were made by people. They are created by people deciding whether a price is too high or too low and choosing what to do with that information. So you could say that the markets are a reflection of what humans are thinking. Since machines can’t grasp the emotional part of what’s happening and only look at numbers, it is unlikely that they will spot the specific nuances that can be picked up that will tell a trader whether the trade is right for them. If the choice is mind or machine, many traders would most likely prefer to use their minds as they have more faith in that than a computer that won’t understand what’s happening. It’s not just a numbers game, and that’s what computers are all about.
Computers clearly don’t have emotions, and that can be seen as a good thing. It’s often said that traders should trade without emotion, and leave their feelings behind and simply stick to what the trades are telling them, and although that’s true, it’s not the whole story. Sometimes emotions do have a part to play within trading, and the fact that a computer can’t get a ‘gut feeling’ about something could mean it’s not as successful as a human would be. Mind or machine? Mind is winning out.
Computers certainly can be adaptable, they can ‘learn’ if their programming is right and allows them to. Starting with specific algorithms, programmers can add or reduce what a computer knows until is it almost perfect. Almost. Because that’s the thing with the markets – they are unknowable, and trying to create a machine that can predict what is going to happen is a hard task indeed. Which means that when it comes to mind or machine in Forex trading, the upper hand has to go to the mind. At least it can adapt more easily (no programming or programmers required), plus when a person loses (or even wins) due to a fluke shift in the markets, they won’t spend a lot of time or a lot of money trying to understand it. It just happens. That’s the nature of trading.
A computer can never teach you to trade properly. No trader who works successfully will ever want to listen to a robot blindly telling them to sell or buy, depending on the algorithms of the day. They want to get their hands dirty, to have fun, to really see what’s happening. And that’s the main difference between mind or machine. Yes, a computer might get it right, but where’s the enjoyable aspect? It’s gone – and without enjoyment, trading will become very dull, very quickly.