Today, although undefined, there have been major advancements in technology in recent years regarding software and hardware in the world of business and medicine. These advancements have revolutionized how money changes hands in the world’s financial markets, how major surgeries are conducted, and how technology is used in the education of today’s youth.
Today, most securities and options traders trade from an electronic platform or even multiple platforms. Even the most common day trader, who trades from their own home or office, probably will have multiple computers and monitors at their desk. From their desk or “trade station” traders can analyze data, build charts, and place his or her trades. According to Leibfarth (2006), most day traders rely on highly expensive computers and charting software to get the results they desire. The newest phenomenon to hit the trading world is algorithmic trading or black box trading. In its simplest form, individuals can programs computers or “black boxes” automatically to place trades based on certain market conditions such as volume spikes, chart patterns, trend lines, or pivot points in the markets. Once programmed, these computers can work alone and require minimal, if any, human interaction. For example, once a computer is powered on it can be directed to buy 100 shares of International Business Machines or IBM at $87.84 per share if a technical level or multiple technical levels in the company’s stock pattern has been met. Basically, the user can create a set of rules for the computer to execute. This does not only apply to stocks but also indexes and commodity futures contracts. Inversely, these black boxes also can be programmed to sell or short a position when either a trader’s profit target has been met or his or hers stop price has been met and the trader just wants to cut his or her losses. The one thing that makes most traders unsuccessful is not their ability to...
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Leibfarth, L. (2006). Charting for day traders. Futures: News, Analysis & Strategies for Futures, Options & Derivatives Traders, 35(1), 38.
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Yarbrough, M. H. (2008). Robot Expands Capabilities for Operating on Children. Retrieved from http://academicdepartments.musc.edu/surgery/innovation/davinci/davinci
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