I love reading investor presentations and recently went through Interactive Brokers’ deck — one of the largest broking businesses today with a market cap north of $100B.
Their opening line struck me:
“We are a highly automated electronic broker.”
It wasn’t long ago that brokers were anything but electronic. Picture the pre-electronic era: A big client calls his broker to place a large order. The broker physically leaves his desk and rushes to the trading ring. Other brokers notice he’s left and literally sprint to the ring to relay intel. Traders in the ring—armed with the expectation of a large buy order—would push prices up before the order even landed.
Everything was about information advantage + speed, but the system was manual, messy, and full of inefficiencies. Any slip in communication, reporting, or execution meant money lost.
Then came the electronic era.
Brokers could automate workflows, reduce operating costs, and in turn reduce brokerage fees. The markets became cheaper to participate in — but also more competitive.
Automation didn’t just compress costs — it compressed time.
Instead of waiting for someone to read a PDF of financial results, traders who could scrape + analyze data faster could trade faster. Whoever processed fundamental info first had the edge.
Speed became a moat.
And automation compounded in three major ways:
- Processing information faster
- Placing trades faster
- Reducing the cost of trading
But there’s a fourth element that doesn’t get talked about enough:
- Reducing the mental cost of trading
Today, traders don’t need to sit at a terminal all day or print annual reports. Software handles alerting, screening, execution, and even analyzing events. Stop-losses and targets can be automated. Position sizing can be rules-based. You can be between meetings, on the road, or on vacation, while orders execute without drama.
This offloads a tremendous amount of cognitive load and stress.
The market is already hard — automation shouldn’t add friction, it should remove it.
In this new era, automation isn’t optional — it’s vital.
Used correctly, it improves not just your PnL, but your headspace.
Happy Algotrading,
— Mohit Bhandari