What is a trading agent?

Definition

A trading agent turns market data and a decision policy into orders that can run without continuous human input. The policy may use fixed rules, statistical signals or an AI model, while the execution layer handles account state, prices and order status.

Autonomy does not remove the need for limits and supervision. Position size, credentials, market access, losses, software failures and strategy changes need explicit controls, logs and a reliable shutdown path.

ELI5

A trading agent is software that watches a market and places trades by following a strategy. It can keep running on a remote computer without a person clicking every order.

For example, an agent can watch a weather prediction market and place low-priced orders when its model finds a gap. A person should still set spending and loss limits because a bad signal or software error can trade real money.

Frequently asked questions

Can a trading agent use machine learning?

Yes. Its decision policy can use a machine-learning model, fixed rules or a combination of both.

What controls should a trading agent have?

It should have position, spending and loss limits, scoped credentials, execution logs, health monitoring and a tested shutdown mechanism.

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