A few years ago, a dedicated discussion on algorithmic trading took place at the FX Week Europe conference. Participants from Goldman Sachs, Deutsche Bank, and other market players emphasized the need for traders to ensure more proper monitoring of their orders when using algorithmic execution. They cannot afford to be passive.

“Buy-side traders with a SET & FORGET approach to using algorithms for executing their currency orders may need to rethink this. With the shift of risk to the buy-side, it’s important for traders to be more proactive about how their orders are executed in the market.”

What threats could this pose?

**Increased Risk**: Due to the rapid nature of transactions executed through automated systems, market shocks can quickly propagate across markets at a much higher speed.

**Over-Optimization**: Despite the ability to test the capabilities of algorithmic trading platforms before conducting real trading operations, there remains a risk of overfitting to specific trends.

**Maintenance Issues**: An algorithmic trading platform requires operational hardware during trade execution. Dedicated computers, servers, and connections are necessary to ensure the system works correctly.

**Monitoring**: Due to the risk of errors, failures, and power loss, automated trading systems require monitoring. Nasdaq recommends that traders create monitoring and observation teams trained to use both visual and audio alerts.

The SET & FORGET approach is applicable exclusively to professional algorithmic portfolio management services, with a dedicated team responsible for regular control and checks. This team should include representatives from trading, client services, compliance and documentation, risk assessment, and credit departments. And even there, as we all know, things regularly go wrong
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