Will the Future of Investing Be Automated?

Automation is not a new concept, it has been around for a few decades now. The manufacturing industry is full of automated machines and processes which are involved in constructing vehicles, for example. What is new is how automation is spreading out across various industries, taking them over and in some cases completely transforming them.
For the world of financial investments, automation looks to be the next step. Already there are a few areas where automation is in place, but further opportunities exist for it to expand. Whether it will all become completely automated and even be a success will depend a lot on what happens over the next few years.

Changing Investment Patterns

There are two main styles of investing, passive and active investment. Active investing has traditionally been the more popular method, with far more actively managed investment funds in existence and active strategies easier to implement for those new to investing and trading. However, in recent years there has been a growth in passive investing, where their net inflows have outperformed those of active funds.

Passive investing is a lot easier to automate, as future investments and trades can be scheduled in advance. Whereas with a more active strategy, while certain elements can still be automated, it’s much more difficult to keep on top of a portfolio when having less of a hands-on approach. If there is a continuing changing trend towards more passive investing, then this could help accentuate a move towards more automated investing in the future.

Existing Automation with Trading Platforms

Already automation can be found across many areas of investment. From being able to set up automatic standing orders from one bank account to another online, to setting up trades to be executed at certain times, there are many ways to automate personal and business financial management.

Spread betting with ETX Capital trading platforms is another way automation is already in use when investing. MetaTrader 4 and other such platforms can be used to implement a number of set circumstances that must be met in order for trades to be entered, exited and executed. This takes away a lot of the active trading and moves it over for a computer system to essentially trade for you.

For example, you can fit your trading strategy around daily life a lot easier with automated spread betting. Using a platform’s automated options allows you to programme it so a certain currency is only bought when it hits one price and sold when it hits another. Stop losses can be implemented to avoid losing too much should everything not go to plan. It is a more hands-off approach but can be successful and is being used by more and more traders and investors.

Benefits of Automation

Automating investment processes offers a lot of advantages for individuals, whether they are looking to grow their personal funds or simply manage their finances a lot better. For starters, it is a lot more efficient and time saving compared to manually looking after every aspect of your own investment portfolio. For businesses, this can increase productivity, while for individuals it means they can focus less on their finances while still seeing them grow.

One of the main advantages for traders and investors in financial markets such as forex, commodities, indices and more, is that automating processes takes away a lot of the human element. While for some it may be the thrill and sense of achievement that they enjoy about trading and profiting, for others it can be their downfall. Stop losses are designed to prevent large losses through trading, but can be overridden if traders get too excited.

Plus, human error can lead to mistakes, losses and other problems whether trading or investing personal finances. Automation gets rid of any element of human error as everything will be set to be executed as instructed. As individuals realise the benefits of automation it is likely to grow in popularity and become more commonplace.


Automated investment advice platforms have been growing in the past few years and many believe they could signal the future of investments. They provide all the tools anyone requires to build and manage an investment portfolio, whether it focuses on just one area or is a highly diversified and complex one. Not only are they quicker and easier to use, most are far cheaper than using a human advisor.

These factors could lead to robo-advisors becoming more popular and threatening the jobs of many financial advisors when it comes to investing. Much of the market for using robo-advisors appears to be those new to trading and investing, setting up their own portfolios.

However, while robo-advisors may be rising in popularity, compared to many other asset management services, they are well behind. At the end of 2015 just $20 billion in assets was managed by robo-advisors, compared to retirement assets themselves reaching $24 trillion. This shows how far behind the technology is at the moment.

The Need for a Human Touch

Another barrier to the entire future of investing being automated is that many people do not trust computers to take care of their finances. A lot prefer to deal with human experts, feeling their money is in much safer hands, even if the chance for human error is much higher. Even though the use of technology is rising in many areas of life, such as online shopping and for other services, when it comes to personal investments many can be worried about handing over responsibility to a machine.

A human financial advisor can also focus specifically on a client’s needs, will be better at identifying opportunities and tailoring their portfolio around them. That human touch can be useful for making changes and more based around an individual’s life and other responsibilities, such as a job or family. This could be one of the things that slows down the rise of automated investments in the long run.

At the moment, it does appear that the next big changes for investing will be with automation. Already there is plenty of evidence in the industry of automated processes and services at work and this is more likely to grow than contract in the coming years.


by Boris Dzhingarov



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