A primary advantage of automated trading systems is that they allow traders to trade from desks in their offices rather than on an exchange floor.

Operational Fairness
In operationally fair markets, trading rules are uniformly applied and no cheating occurs. Traders widely believe that fully automated trading systems are the fairest of all market structures. Automated systems do only what they are programmed to do. They implement their trading rules exactly and without exception. They expose orders only as instructed and only to those traders to whom orders may be exposed.

In contrast, fairness in oral auctions depends on the skill and honesty of the traders who arrange the trades. Traders must follow trading rules honestly even when doing so may cause them to lose an advantage. Although most oral auctions are quite fair, all such markets have suffered from well-documented trading scandals involving front-running, inappropriate order exposure, fraudulent trade assignment or prearranged trading.

Front running occurs when a broker improperly allows one order to trade ahead of another order; the order that goes first usually profits from the price impact of the following order. Inappropriate order exposure occurs when a broker shows an order to another trader for the other trader's benefit rather than for his client's benefit; the other trader will typically act on the information, either by trading ahead of the order or by refusing to trade with it. Fraudulent trade assignment can occur when a broker executes orders on the same side of the market for more than one client; a dishonest broker may assign the best prices to his favored clients. Prearranged trading occurs when a broker arranges a trade without properly exposing her client's order to other traders who might be willing to offer better prices; under such circumstances, the client often receives a worse price than he might have received if the broker properly exposed the order.

Fair Access
Markets have fair access when all traders have equal access to the market. In such markets, no traders have special advantages over other traders. Few trading systems provide pure fair access.

In floor-based trading systems, floor traders have an advantage over off-floor traders. Floor traders can see and react to market developments well before off-floor traders can.

Off-floor traders must obtain their information through market data systems, and they must respond through an order routing system. Floor traders also can observe all market information revealed on an exchange floor and not just what the market data systems report. In particular, they observe who is trading, which can be valuable if you can guess why they want to trade or who they represent. In some floor-based markets, large and loud traders have some advantage over others because they can control the spots within the pit that offer the best sight lines.

Automated markets favor traders with good keyboard skills and abstract visualization skills. Although most people would not consider this unfair, it does cause anxiety among some traders when they first start using electronic systems. Automated markets also favor traders who use automated systems to generate their orders. Such systems can monitor electronic data feeds and respond instantly to new information. Although this advantage is a natural consequence of faster trading technologies, many manual traders resent competing with such automated traders.

Convenience
A primary advantage of automated trading systems is that they allow traders to trade from desks in their offices rather than on an exchange floor. This convenience allows traders to sit next to their telephones and to consult any data systems they want in support of their trading.

Such facilities are often difficult or impossible to arrange on the floor of an exchange. Floor traders who want instant access to telephone and data services must carry cell phones and portable data terminals with them onto the trading floor. These instruments are often cumbersome, and some markets do not permit them. The NYSE recently introduced an innovative mobile electronic communications system for its floor brokers.

System Capacity
More traders can directly participate in an automated auction than in an oral auction. The number of traders who can effectively communicate with each other at the same time limits the size of an oral auction. When too many traders try to participate in the same auction, they exceed its capacity to process information in an orderly fashion. As the number of traders bidding and offering is large, traders cannot easily keep track of who is quoting the best prices. Traders may then mistakenly arrange trades that violate time precedence or even price priority.

Great numbers of traders can simultaneously interact with each other in automated trading systems because these systems process order messages much more quickly than people can. Traders who use automated systems do not have to keep track of the best bid and offer. Instead, they let the system do it for them. They also do not have to arrange their trades. The system does it for them according to the market's trading rules. By supporting these functions, automated trading systems allow traders to focus their attention exclusively on the creation and submission of their orders.