Advantages and Disadvantages When Using Computers in Stock Trading

The advancement of technology has led more and more people to use computers. Whether used as a mode of communication or transacting business, the computer has drastically changed and has improved everyone’s way of living.

In the stock market today, most of the transactions are made online. The trading of stocks over the Internet has become a common practice. The use of computers with high tech software has made trading easy as well as convenient. Many investors prefer to use them because of the assistance they get on how to buy stocks and when making important decisions. Also, there are others who believe that the computer is better at choosing the right kind of stocks than humans.

Computers have no emotions. Investors, stockbrokers and shareholders do not have to deal with any of the emotional tie ups that human beings usually have. Computers on the other hand provide objective recommendations. They sort through hundreds of stocks in search for the one compatible to the order. They do not become confused as humans can sometimes do. Computers do not know how greed feels like, and thus, they give a more precise stock choice.

It must be understood, however, that no computer system is perfect. Computers will have glitches from time to time, and their connectivity will depend on their individual servers, internet connection, and the like. Even the most high tech and sophisticated computers will not be able to detect possible variables in the market in the same way that humans do.

When using computers in stock trading, the computers sometimes recommend the same stock to different buyers or sellers. Consider a situation that when people want to invest in the same kind of stock, all of them will look for that same stock. If all the computers in different companies do the same thing, it is mostly likely that investors will be fighting for the same kind of stocks as recommended by the system.

The use of computers in stock market trading is a system that needs to be continuously perfected and studied. While there are lots of benefits in their use, there are still flaws that need to be resolved. Sophisticated and high tech computers will need to withstand the stock market world, being an unpredictable place to be.