Voice-Activated Trading: Are the Rewards Worth the Risk?

Although I spend a lot of time talking about cutting-edge computer technology, I haven't discussed voice technology that much, except for a couple of articles about getting help with general tasks.

While Cortana or Google Assistant installed on your laptop trading computer can help find a restaurant in a new town, they haven't been of much use for day-to-day trading tasks. But voice recognition is becoming more and more of a potential component of a trader's toolbox.

So today I thought I'd bring you up to speed on what traders need to know about it. And what the risks are for your trading business.

Have We Come Full Circle?

When I started trading in the late 1980s, personal computers were still in their infancy. They had miniscule hard drives and limited software. There was no Internet.

As an individual trader, you had to call a broker on a landline to put in an order. Sometimes it would take 20 minutes or more to execute.

You may have heard me talk about my experience working at the NYMEX back then. As a summer intern straight out of high school, I was drawing point-and-figure charts with pencil and paper. The floor of the NYMEX was a noisy place with traders shouting orders at one another all day long.

Today's new voice-activated technologies hearken back to those noisy days. With a growing number of brokerage platforms, you can now shout out your trades to voice-recognition devices like Amazon's Alexa.

But just because you can, should you?

A Little History and Terminology

Although it's quickly gaining ground, and despite what you see in commercials, digital voice assistants (DVAs) like Alexa are only being used by about 34% of the U.S. population in 2019. They've only been around since 2014. And they've only really been capturing the public's attention since 2017.

So don't feel bad if you aren't even sure what I'm talking about.

Smart Speakers

You've probably seen the commercials… people talking to a little table-top device that usually looks sort of cylindrical and that acts like the Siri or Cortana app on your smartphone or trading computer.

Technically, that device is a smart speaker. Amazon Echo and Google Home are the top brands (with 69% in 2018), with additional devices offered by Alibaba, Apple, JD.com, Samsung, and others.

But instead of connecting to the Internet through your phone or computer, they connect via Wi-Fi or Bluetooth. So you have to have wireless connectivity to the Internet in your home before you can use a DVA.

What Is a DVA?

The digital voice assistant itself is cloud-based software you access through the smart speaker.

Most smart speakers are powered by the same digital assistants created for smartphones (i.e., Siri, Google Assistant, and Cortana). Alexa is the exception, being created for the Amazon Echo.

Alexa and other DVAs are triggered—or woke—via a specific word or phrase, such as "Alexa," or "Ok Google."

Skills and Actions

Just like you have apps on your smartphone or extensions on Chrome, you can expand the functionality of your DVA with similar technology. Alexa has "Skills" and Google Home has "Actions."

Education/Reference and Games/Fun are the two largest categories of both Skills and Actions. But the sheer volume of apps is growing quickly, just as it has been for the smartphone market.

What DVAs Can Do

DVAs understand natural voice language commands. Their capabilities include performing tasks (like playing music or setting a timer) and fetching information (like the weather forecast or market news).

If you have the right (smart) technology in your home, the DVA can do cool things like turn lights on and off, adjust the thermostat, close the garage door, and even talk to the refrigerator.

Some smart speakers have display screens that can display a recipe, show who's at the door, or let you talk face-to-face with your grandchildren.

Limitations

If you've used a DVA (like Siri) on your smartphone at all, you know there are limits to what you can say to be understood. Although you don't have to talk like a robot ("Alexa, turn on TV, show guide"), there will be times when the DVA just won't get what you're saying.

But this is artificial intelligence, so the DVA will learn over time.

Always On

DVA's are designed to be always on. With a DVA on a smartphone or trading computer (like Siri or Cortana) you can change the setting to require a button push to wake the app, so it isn't always listening (ostensibly).

But when pairing a DVA and smart speaker, the DVA can only be triggered with a voice command, so it's always listening.

Trading Comes to DVAs

It Started with Banks

Capital One was the first bank to create an Alexa skill for its customers, in 2016. In 2017, they introduced their own digital assistant, Eno.

To date, Eno has mostly been used for checking balances. That makes sense. It's a simple question. "Hey Eno, what's my bank balance?"

That's easier to imagine than "Hey Eno, transfer $2000 from my checking account to Henry's savings account tomorrow morning at 8am." Just seems like more could go wrong there.

Brokerage Houses Join In

It wasn't long before brokerage houses jumped on board. In 2016, TD Ameritrade allowed customers to ask for stock quotes. Fidelity and Charles Schwab soon followed.

Then in October 2018, TD Ameritrade announced a new Alexa skill for voice trading. Not only can customers get answers to market questions and customized market updates, they can also check their account balance, get account history info, and place trades.

In their announcement, TD Ameritrade said they recognize that voice interfaces like Amazon Alexa are becoming more pervasive. They predict that by 2020, 50% of all searches will be voice-activated.

To start trading by voice, a customer must visit the Alexa app to enable the TD Ameritrade skill and set up voice codes.

Here's the Big Draw

The draw here is that voice-activated trading is way quicker than grabbing your device, logging into your trading account, navigating to the trading window, and entering the necessary information.

Instead of all that, you can just say "Alexa, sell all my shares of Funko."

Wow! That's a time saver! And think how much slippage you avoided.

But before you rush out and start voice trading, what are the risks?

Should Traders Use a DVA?

Is it accurate? Experts claim that today's voice recognition software is highly accurate. Personally, I would play around with making non-financial requests first, to be sure Alexa and I are really understanding one another.

Is it secure? Experts claim DVAs are more secure than trading platforms. DVAs can be set to execute only those trading commands spoken by an authorized trader. So Alexa won't let little Johnny blow up your account.

And, experts point out, it's much more difficult to mimic someone's voice than it is to hack into someone's trading account on a computer. (Reminder: set hard-to-guess passwords.)

Is it private? Experts tell us that, even though Alexa's microphone is always on, Alexa isn't transmitting any audio back to Amazon until it hears the wake word. Plus everything sent to Amazon (or Google or wherever) can be viewed in the app. You have to decide for yourself if that's good enough. Especially when it comes to trading.

What's My Advice?

I think it's fine to ask Alexa for market updates or stock quotes.

However, I personally don't want Alexa to be able to access my account.

For me, the risk of misunderstanding is too great. What if you want to buy GOOGL and Alexa buys GOOG before you can get the "L" out?

Alexa takes what you say and runs with it. That makes it fast, but it increases the likelihood of error.

If you've spent any time at all asking questions on Siri or Ok Google, you get what I’m saying here.

In trading, errors cost money. Maybe lots of money. To me, it's just not worth it.

There are more trading computer tips like this in our buyer's guide. Check out our "How To Buy a Trading Computer" e-book. We hope today's Quick Tip helped you. If you found this helpful, you'll want to check out the other computer How-To's I've created on this page. You can always call us if you have questions: 800-387-5250.

Photo by Fabian Hurnaus on Pexels.

Frequently Asked Questions

Can you trade stocks with voice commands?

Some brokers now support it, either through their own app or through a voice assistant skill. Capability varies a great deal — many allow quotes, balances and positions by voice but stop short of order entry, precisely because of the risk of misrecognition. Check what your broker actually permits rather than assuming.

Is voice trading safe?

For information, reasonably. For placing orders, it deserves genuine caution. Voice recognition mishears numbers, an assistant is always listening for its wake word, and anyone within earshot can speak to it. There is also no natural pause — the half-second between deciding and clicking is a small protection you give up entirely when you speak.

What is a digital voice assistant?

Software that listens for a spoken command and acts on it — Alexa, Google Assistant, Siri and the rest. They extend through what Amazon calls skills and Google calls actions, which are add-ons built by other companies. A broker's voice capability is usually one of those, which is worth knowing because it means a third party is in the path.

Do smart speakers listen all the time?

They listen continuously for their wake word, and only send audio onward once they think they have heard it. The practical concern is false triggers — devices do sometimes activate on something that merely sounds similar. In a room where you discuss positions or read account numbers aloud, that is worth a thought.

Should traders use voice assistants?

For the surrounding work, they are useful — checking a quote without leaving a chart, setting a reminder before an earnings release, asking for a balance. For placing or modifying orders, most traders are better served by their hands. The value of voice is convenience, and order entry is the one place in trading where convenience is not what you are optimizing for.