Not long ago, algorithmic trading was purely the realm of institutional bigwigs on Wall Street. But in just a few years, algorithms have become integral to mainstream investing thanks to major advances in technology. By crunching market data and executing trades in milliseconds, algorithms can react much faster and with much more accuracy than any human. So it's no surprise automated trading is projected to balloon into a $20 billion industry by the end of 2024.
For more than a decade, Zak Westphal has been at the forefront of not just democratizing algorithmic trading but demystifying it through his intuitive educational platform, StocksToTrade. In his day-to-day work, Zak works to actively bridge knowledge gaps so that retail investors can both access and capitalize on these institutional-grade tools. But he understands the work is far from done.
Algorithmic Trading: Explained
At its core, algorithms use advanced computing power to automate complex trading strategies instead of relying on slow human reactions. They can digest tons of market data, spot patterns early, and place orders within milliseconds based on coded rules. This opens up abilities like high-speed trading across assets and backtesting strategies against historical scenarios.
Thanks to the explosion of machine learning and cloud tech, algorithmic capabilities have opened up to everyday investors. Still, regular people face gaps in practical education around such powerful tools.
After spending over a decade focused on expanding retail traders' responsible access to institutional-grade algorithms, Zak gets the real-world growing pains surrounding their adoption. As he puts it, "Handing someone a loaded weapon without training is reckless. The same applies to algorithms."
Democratization Has Come Far, But Gaps Remain
"I remember when I first started out over 15 years ago, algorithmic trading was totally out of reach for regular investors. Between the opaque tools, sky-high data costs, inadequate educational materials—we faced barriers to entry on all fronts. It felt like an exclusive club only the wealthy could access."
Zak reflects candidly on the obstacles facing retail traders not long ago regarding advanced analytics and automation. However, expanding access points through brokers catering to individuals as well as democratizing platforms like StocksToTrade have markedly changed the landscape of possibility for ordinary citizens. Though gaps remain, progress in expanding access to institutional-grade systems amongst the wider public has been immense.
Responsibility Must Catch Up to Technology
"No doubt the acceleration in retail access to sophisticated algorithms has been game-changing. But progress focused way more heavily on expanding capabilities rather than accountability. When we're talking about autonomous systems directing billions in capital, things like transparency, education, ethics—those can't be afterthoughts."
Though everyday investors enjoy greatly expanded access, Zak sees glaring gaps around responsibility still leaving new users vulnerable to risks only industry veterans may fully grasp.
The Future Calls for Human Guidance
"Pandora's box is open when it comes to algorithmic trading—these systems are only becoming more advanced across the board. That horse has left the barn." Zak explains.
"So providing guardrails and oversight to guide that growth responsibly becomes crucial. We need to keep innovating, but in a direction aligning with our highest intentions for financial markets that distribute prosperity equitably. Integrating human ethics and literacy around algo impacts are key."
Education: The Great Equalizer
"At the end of the day, technology is just a tool—albeit an incredibly powerful one," Zak notes. "But like any instrument, the outcome depends entirely on the skill of its wielder."
He explains, "Education unlocks true empowerment and sustainability. That's why we've invested so heavily over the years in training traders to implement algorithms judiciously based on real-world risk appetites."
Per Zak, literacy translates capability into actual utility. "Handing advanced analytics to novices without context often undermines rather than uplifts them as complexity overwhelms before skill sets refine."
As such, progressive, practical education that meets individuals where they are remains imperative. "The promise of democratization means not just access, but informed access across the board. That's how we distribute gains fairly to the many rather than just efficiently to the few."
The Future Is Bright for Responsible Algorithm Access
While increased access is inevitable as algorithms advance, that doesn't mean growth in usage can't be responsibly guided. Zak sees promise in the trajectory of more platforms adopting a thoughtful, user-focused approach prioritizing practical education alongside technological enhancement.
He emphasizes that technology needs to be framed as a tool amplifying human aptitude rather than replacing individual discretion and oversight. When powered by collective wisdom instead of exclusively commercial incentives, Zak believes automation and AI in trading can distribute prosperity more equitably across society.
Aligning capabilities with user needs and ethical priorities paves the path for algorithmic systems serving financially underrepresented communities rather than displacing them.
