Automated Trading Risks Explained

Automation does not remove risk

An automated system can place or suggest decisions quickly, including incorrect ones. A coding error, stale data or unusual market condition can be repeated at scale.

Operational risks

Internet outages, exchange interruptions, price gaps, latency and rejected orders can produce results different from a simulation.

Controls to consider

Understand the logic, test with non-live data where possible, use defined limits, monitor activity and know how to stop the system. Never assume that “AI-powered” means self-correcting or profitable.

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