How has technology impacted Online Trading

Over the last two decades, technology has played a massive role in enhancing our lives. Be it education, business, social, or governments, every sector has undergone a 360-degree transformation, with the help of technology. Having said that, it would not be wrong to say that the most significant impact of technology can be seen and felt in the stock market and trading industry.

The most significant testimony to this fact is the London Stock Exchange, which used the power of technology to boost its economy and today proudly holds the label of the third most profitable stock market in the world.  Technology has changed the way people buy and sell stocks; today, there are no brokers; instead, the investor uses the online forums and chat rooms to gain insights on different stocks, and with proper research, they invest their money. The real-time investment of shares, without the barrier of time and place, is the biggest contribution of technology.

Electronic trading was first introduced in 1986, and since then, it has changed the dynamics of trading. Today with the help of information technology, traders can base their investments on logical and realistic calculations, proper data now back their purchases, and their decisions are constructed on the firm foundation of research.

Let’s look at how has technology boosted the online trading industry:

  • Computerized Trading Terminals

The Computerised cloud-based terminals have today provided investors with a secure network, using which they can trade real-time, access the fluctuation in prices as and when they occur, and free chat with other investors.

While AI is slowly entering businesses and transforming them, the stock market is also adapting this technology to analyze investor chat at investment portals, study the tonality of recorded calls for investment purposes, identify scams and study the common investment patterns. Wall Street is one of the first markets to adopt this technology. With AI gaining popularity, the role of machines will be crucial, and human interference will be minimalistic.

One thing that online trading has eliminated is the role of brokers. Traditionally the broker or the middle man was the only source of receiving financial advice, and based on the brokers’ understanding, the investor would float his money. Today with online trading, investors can themselves execute quantitative trading without having to pay a broker.  Technology has enabled traders to buy and sell stocks as and when they want directly.

Smartphone has become the real game-changer for the online trading industry. Now, people don’t even need to sit in front of a computer to trade. Today, with the computing power of the smartphone, investors can put their money on anything, be it stocks, cryptocurrencies, or commodities. Further, the notification feature in the smartphone helps investors to be updated on the movement of stocks in real-time.

Traders, bankers, or governments, today everyone relies on the power of BIG DATA. Prominent business and community decisions are taken based on data analysis. Today there are big agencies that only specialize in providing detailed reports on various subjects based on real-time data. Thankfully today, the internet is the storehouse of all the data; traders and investors use the online medium to collect data on market trends and behaviors. Based on the data analysis, quantitative high-frequency trading is performed.

Bottom Line:

Technology has fundamentally changed the way financial markets function today. Today the trading algorithms have enabled investors to decide their investments based on proper analysis, rather than mere speculation. In short, technology has empowered individuals and companies to channelize their finances in a safer and value-creating environment.

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