Goldman Sachs Dives into Automated Trading

After much deliberation, Goldman Sachs has finally implemented a Robo-adviser on their platforms, making the lives of some of their customers much easier.

The main drive behind this implementation was to increase sales and the rate at which the company can provide service. Because when you are at the size of Goldman Sachs, there is not much room to grow in terms of customer service. There will always be hiccups in the speed at which you can provide information to those seeking it.

An automated Robo-adviser is a perfect solution for this as well as the management of the clients’ funds.

It was launched as a separate project, a child company, so to say, called Marcus Investing. Now, even though this platform was made in order to suit traders of all sizes, we can’t really say that it’s convenient for everybody. With a minimum commitment of $1,000, Goldman is definitely not targeting markets outside of maybe the US, Canada, UK, and Australia.

What does this mean for the future of trading?

Up until now, Robo-advisors, automated trading software, and various other AI-based robot trading systems were a feature of smaller and less reputable companies. Goldman Sachs implementing this on their own terms paves the way to normalizing such systems for larger players, thus making it much more accessible for traders of all sizes.

This is excellent news for traders who are relatively new to the industry. Most of these traders do not understand the complex nature of strategizing and analyzing information for the perfect trade, nor do they have the time for it. Therefore, a Robo-advisor or an automated trading software would be a godsend for their perils.

Will it spread as fast as we assume?

It’s likely to do so, yes, simply because of how much praise the system has already received from third-party websites. For example, automated trading software alongside Robo-advisors is some of the most mentioned recommendations in any guide to trading deposits anywhere. Why without deposit in particular? Because a deposit structure, which does not provide a support system similar to Robo-advisors, is twice as risky.

A relative beginner that usually doesn’t know what he or she is doing is at risk of losing quite a lot of their own money should they not be provided with some help. But, combining the Robo-advisor as well as a lack of deposit is the ultimate safest way to start in this industry, thus we see it plastered everywhere.

There are still some issues

Regardless of how positive this new update may sound, there are still some underlying issues. For example, it’s noted from Goldman’s report that the system will automatically detect the risk tolerance of individual investors.

What this means is that you may be trusted by a human manager to handle a certain amount of risk, which then subsequently lands you a certain amount of profit, while the Robo-advisor takes a quick look and judges simply based on the data provided.

Furthermore, there may be some issues in how much of the user’s history is considered by the software, thus affecting a lot more traders.

Too long didn’t read

After so much talking about the potential of this software, how long will it take until we see actual results formulating for this? Well, that’s a different topic of discussion. We would have to wait for data from Goldman themselves, which could take a few more months as the main chunk of data would have to come from Q2 of 2021. And usually, the data from Q2 is available in the middle of Q3.

 

Image courtesy of Phil Town’s Rule #1 Investing/YouTube Screenshot

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