Automation has redefined how investors approach strategy, analysis, and execution. From robo-advisors managing portfolios to sophisticated algorithms processing vast volumes of data in seconds, the tools used to make investment decisions are evolving at a rapid pace. This shift is transforming traditional approaches, giving both institutional and individual investors access to faster, more data-informed choices.
Michael Shvartsman, an experienced investor and entrepreneur from New York, observes, “Automation has changed the way investors engage with markets. It brings speed and scale to decision-making, which can significantly affect outcomes when used responsibly.”
- The Rise of Algorithmic Trading.
Algorithmic trading uses computer programs to follow a defined set of instructions for placing trades. These instructions are based on variables like:
- price,
- timing,
- volume,
- or even sentiment from news headlines.
According to data from JP Morgan, over 60% of trades in the U.S. equity markets are now driven by algorithms.
This type of trading has become popular among hedge funds and asset managers due to its ability to remove emotional decision-making and increase efficiency. It allows investors to monitor multiple markets simultaneously and respond instantly to changes.
Michael Shvartsman notes, “The advantage of algorithmic trading lies in its ability to detect and act on patterns far faster than a human could. For investors who understand the systems and maintain oversight, it offers a powerful edge.”
- Robo-Advisors and Democratization of Investing.
Robo-advisors have expanded access to portfolio management for people who previously might not have considered investing. These platforms use automation to design portfolios based on user profiles, balancing risk tolerance with goals and timelines.
Statista reports that robo-advisors managed over $1.4 trillion globally in 2023, a number projected to grow steadily over the next several years. This trend highlights how automation is reshaping entry points into investing.
The use of robo-advisors isn’t limited to beginners. Sophisticated users also benefit from low fees, consistent rebalancing, and tax-loss harvesting—functions that previously required high-touch financial advisors.
As Michael Shvartsman puts it, “Automated platforms have created new pathways for individuals to build wealth. They help more people invest in a way that aligns with their financial reality, even with modest starting capital.”
- Data-Driven Decision Making.
Automation empowers investors with access to large-scale data analysis. By processing real-time market data, social media trends, and economic indicators, automated systems help investors form a broader picture before making decisions.
Investment firms now use machine learning to predict market behaviors or assess risks in portfolios. These systems constantly refine their models as they absorb new information, often detecting shifts before they’re visible through traditional research.
Still, automation depends on the quality of its inputs. Flawed or biased data can lead to missteps. For that reason, human oversight remains essential, especially during times of economic uncertainty when historical data may not reflect current conditions.
Michael Shvartsman adds, “Automation enhances decision-making, but investors must remember that algorithms aren’t immune to error. It’s still important to apply judgment, particularly when interpreting the data behind those automated suggestions.”
- Risk Management and Efficiency.
Speed and accuracy are key benefits automation brings to managing investment risk. Automated systems can trigger responses when markets reach certain thresholds, helping to reduce losses and rebalance portfolios before damage escalates.
For example, automated hedging strategies can be set to respond to sudden currency fluctuations or unexpected shifts in commodity prices. This is especially useful in fast-paced markets like crypto or forex, where changes can happen within seconds.
However, speed can also lead to problems. Flash crashes, where automated trading spirals out of control due to cascading sell-offs, highlight the dangers of unchecked automation. These events reinforce the importance of monitoring and updating automated systems regularly.
- Ethical and Strategic Considerations.
As automation becomes more embedded in investment processes, ethical questions arise—especially concerning market manipulation, data privacy, and accessibility. Automation can reinforce existing biases in data or strategies if not programmed carefully.
Moreover, when too many investors rely on similar automated tools, markets risk becoming more uniform and reactive, which can magnify volatility during shocks.
Michael Shvartsman emphasizes the importance of thoughtful implementation: “It’s easy to be impressed by what automation can do. But the real skill lies in choosing the right tools, applying them with purpose, and understanding their limits.”
He suggests investors combine automation with a strong foundation in market knowledge, using technology as a tool rather than a substitute for thoughtful strategy.
- Embracing a Balanced Approach.
Automation offers new levels of speed, scale, and efficiency in investing, but it should be used wisely. Its strengths lie in processing data quickly and carrying out repetitive tasks, freeing investors to focus on strategic thinking. When balanced with human insight, automation can help create more consistent, responsive, and data-backed investment strategies.
Michael Shvartsman summarizes it this way: “The best investors understand when to trust the algorithm—and when to question it. Automation should support your goals, not define them.” As the investment landscape continues to evolve, blending innovation with judgment will be key to long-term success.