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Important ways technology is transforming how we trade

Trading has evolved a lot over the years, but technology is catapulting it faster than we ever thought.

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Trading has evolved a lot over the years, but technology is catapulting it faster than we ever thought.


Technology is accountable for many ways that the modern world has been shaped. Computers are a staple tool for nearly every job, an internet connection is available from almost anywhere in the world and you can order anything from a hot pizza to a brand-new car direct to your home with a few clicks online.

It has, and is, also playing a big part in transforming the way that we trade. No longer do individuals need to use the services of a stock broker to track their investments, with the internet and other technological developments changing the way we trade in many ways.   

Instant Trade Executions

The majority of trades are carried out through increasingly complex computer systems. These have developed to the point where trades can be executed in just 16 microseconds. That’s not just less time than it takes to blink, it’s less time than it takes to even come up with the idea of thinking about blinking.

Such systems have made trading everything from stocks and shares to currencies, commodities and more almost instant. This allows us to trade quickly based on real-time events, reacting to price movements before they change again. While this offers great opportunities to profit, such quick executions do also increase the chance of making a mistake and it going through, with much less room for error.  

Overload of Information

The internet is full of information, with billions of pages covering everything from aardvarks to Zumba. This goes for trading too, with there being a plethora of information readily available to anyone who seeks it out online. From beginners looking for a useful starting guide to trading forex, to experts requiring in-depth analysis about Zimbabwe’s stock market, all this and more can be found.

Being able to access financial market news as soon as it happens is one of the main benefits technology provides traders, as they can react accordingly and in good time to such information. However, with so much available it can be hard, especially for beginners, to sort the useful from the useless and weed out unreliable sources.     

Ease of Access

Trading is now a lot more accessible to an increased amount of people. It used to be that only those in the financial industry would be trading currencies, commodities and more, with any individuals willing to make such investments needing to call up their broker. Technology has got rid of such a need, providing anyone who seeks it out the tools online to begin managing their own portfolio and trading.

It’s not just individuals that the increased ease of access has boosted online trading for either. Retail traders are taking advantage of FX trading as a new investment method. The price transparency electronic trading platforms provides has been another factor in trading transforming and becoming an important part of individual and retail traders’ portfolios.   

Increased Competition

Technology has turned the trading landscape into a far more competitive one, something that is good for traders. With many different brokers vying for business, as soon as one introduces a new or improved feature for their trading platform, the others have to follow suit to keep up. This means that they are forever advancing, making trading quicker and more efficient.   

Most providers allow accounts to be spread across various devices, so you can trade on desktop, tablet and smartphone. While a charting feature used to be something new, now every broker offers one as part of their platform. Plus, the internet has given room for smaller providers to emerge and grow, further increasing the options available to traders.  

Flexibility

Trading platforms have developed greatly in the past decade, often due to external technology advancements. From desktop software which first allowed professional traders to buy and sell currency, online trading platforms soon developed whereby individuals could begin making trades from home without the need for a broker.

Around a decade ago the first smartphone was introduced to the world and has further revolutionised trading. One or two places developed a trading app for smartphones and the rest followed suit, with most brokerages now offer trading apps for phones and tablets in order to keep up with the competition. This was unheard of ten or so years ago.

Being able to trade from a smartphone or tablet has increased the flexibility in which people can trade. Now individuals can invest in stocks and shares on the commute to work, react instantly to price movements on their phone or buy and sell currency in their lunch break.      

Downsides

For the most part, technology is changing the way we trade to make it far more efficient and accessible. There are a few downsides to the industry though, with there now a reduced number of jobs in the sector as more and more traders turn away from using traditional stock brokers to make investments themselves through trading platforms. In some ways however, it is simply that the profession of a stock broker is transforming into other roles, such as financial adviser and more.

The speed and ease in which people can make trades thanks to online platforms can also lead to more and higher losses. For amateur, self-taught traders, having access to tools where they can trade away large amounts of money can be dangerous.

Future Changes

Technology has not stopped advancing, and there are many more developments set to further change trading in the future. Blockchain technology and the bitcoin currency, the use of big data and analytics and more robots using algorithms rather than human traders involved in the industry have the possibility to further transform trading. Access to more and quicker technology could result in an increase of high-frequency traders, as trading habits evolve to more instant trading too.

All these existing changes and potential future ones will see the practice of trading currencies, stocks and shares and anything change beyond recognition. At the moment, much of the changes seem to be far more positive for both individuals and the industry, though how long this will go on for remains to be seen.     

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