Will trading eventually be done by programmed computers and not by people? Are we really headed that way? The computer age is bringing about unprecedented change in the markets. Even now it is altering the manner in which we conduct business, interpret events, gather information, and keep ourselves entertained.

While computers can expand our intellectual horizons, they can also limit creative interpretation. There is a tendency these days to let computers do the work of designing and discovering rather than relying upon intuition and imagination. All too often this is taking place even when it flies in the face of reality. In a business context, computers reduce problems to statistical probabilities without necessarily considering the broad effects of events and relationships. No computer can keep you safe from those events which come unexpectedly, and which cause markets to go berserk. Wars, sudden shifts in political power and alliances, and natural disasters, can cause markets to become suddenly and extremely volatile. Even when statistics take such extremes into account, how do you defend yourself if you are long and a market crashes?

Im not saying that computers shouldnt be used to prove or disprove theories. But keep in mind that the intuition of the human mind has not yet been duplicated by electronic circuitry. Our educated insights are the critical tools with which we learn and comprehend how markets work.

Joe Ross Trading Educators Inc