Seems to me that any algorithm, regardless of frequency, would replicate the lack of emotion. A computer programmed to trade once per day would lack emotion the same as one programmed to trade thousands of times per second. Also, looking at the book is only "proactive" if in fact all of the trades sitting in the book get executed, no? If I look at the book at t=0 and it triggers a trade at t=1, there is no guarantee that at t=2 the book will still support my trade decision. The time difference between 0, 1 and 2 can be nanoseconds, it still ends up with the same uncertainty regarding actual execution or the continued presence of the orders in the book at t=0. There is no way around uncertainty.
Algos can't adapt to changing environment as flexibly as humans and after all algos are just small parts of human thinking being transformed into computer code. Not even speaking of errors which cost a lot indeed. So ideal trader is probably a human, but without emotions, which may negatively affect trading. Some emotions, such as joy from the process of the "play" could even help, though.
Sure HFT and algos can and do lose. However, they have proven to be superior overall to anything preceding them. As far as the emotion thing goes-- it's issues within like wealth wounds and self destructive tendencies that destroy even the most intelligent trader--- witness simulator success but real money failure as an example (all things being equal) Personally, my urge to swing for the fences on every trade -- despite nailing the entry-- has lowered my win percentage and amount substantially over time.
Honestly I have yet to meet a trader who is truly consistent on simulator, but loses trading even say just one contract or small live amount in FX. Most who claim to be "consistent" on sim just do it for maybe a week or a month, consider themselves "ready" go live (on size often) and of course lose, not because it's live vs. simulator, but just because they are not yet consistent.
Real money gets stress hormones pumping fight or flight cortisol, body chemistry changes with real money , emotions start getting real and suppressed ego and psyche start normalising and reacting with the market beats.
I am also not one to buy into this psych emotional bs either, I believe it's another scam in this industry quite possibly. You have some sort of edge or you don't. There is no way it's in pure TA or else everyone would be making money after they bought or downloaded the Murphy book. Now of course, you have to be level headed enough to stick to the rigid plan with discipline to carry out the edge, but I think many people deviate from it (if they have it) and/or are just gambling because they are fucked in the head to begin with and can't control themselves. I don't know... not stating any facts, just some thoughts. btw, where is the proof in the fact that HFT algos are far superior to human performance? Maybe on average this is true, but I've heard of humans achieving some insane performance in markets that I have never heard of HFT algos matching.
That's why trading is now easier than ever, because one can trade live, but SMALL amount, starting from nearly negligible risk, while still being real money (say if one trades 100 shares of SPY or $10K notional in Euro)... adding size SLOWLY... But few do it, everyone is a macho and wants to swing the big bat... leads to getting this bat stuffed up his... err... Hence I believe women are better traders (and probably make much better country leaders too)... No typical male "macho" behaviour and aggression caused by testosterone.