We can all agree that technology has changed our lives. It’s embedded into the way we work, play, communicate, learn, and interact with each other. The world of trading on the financial markets of the world has not been left behind.
Let’s take a look at some of the ways the digital revolution has changed the way things are done in the world of trading, both positively and negatively.
As it has done in so many other fields, technology has made it a lot easier for people to get into trading that would otherwise never get the chance to. With the internet, the free flow of information means people can monitor markets and manage their holdings as long as they have an internet connection from anywhere in the world.
Technology doesn’t stand still for anybody. What’s hot today can be surpassed with an even better solution tomorrow, and the trading world has to keep up. Brokers and trading platforms have been forced to upgrade their offerings to match the pace of technology, with the ultimate winners from this being the customers.
More Opportunities for Smaller Operations
Trading used to be the preserve of the Big Boys – those with the capital and manpower required to set up and operate the complex platforms and systems needed to operate effectively. This has changed, as technology allows small-time operators to set up and launch their services on shared platforms.
Increased Trading Flexibility
All today’s trader needs to operate is a working internet connection. Wherever they are in the world, technology has made it possible to access information and manage portfolios, day and night. This was an expensive and slow moving undertaking back when we had to wait on media reports to know what’s happening. Everything is being reported in real-time, as it happens.
Rapid Automated Execution
Transaction-based trading used to be a time-consuming and complicated operation. The advances in technology we’ve witnessed have transformed this aspect of things all the way from the dealing desk to the back office. Smart systems and trading algorithms have been developed that greatly reduce the need for large trading management teams and constant supervision. What used to take a full working day can now be accomplished with a few clicks of a button.
The Rise of the IT Manager
With trading technology constantly evolving beyond the scope of the average trader, Information Technology expertise has become a required skill-set for most trading firms. With massive servers, complex algorithms, and intricate systems, the value of the IT management is now no longer considered a supporting role but an integral part of any trading enterprise.
What Are Some of The Downsides?
There are two sides to every coin, and technology in trading is no exception. Here’s a look at some of the negative aspects of these new developments.
Susceptibility to Flash Crashes
High speed, high frequency trading is all well and good, but a frightening side-effect of this is that when things start to go wrong they do so really quickly. A tumbling stock can accelerate downwards with lightning speed as traders race to cash out, and this effect brings about significant market distortions that simply wouldn’t be possible in slower-paced environments.
Limited Human Interaction
The fact that all one needs to start trading is a working internet connection has made it unneccessary to work with people. It’s a good thing that technology has opened up the trading field to many who would otherwise have been locked out of it, but the human element is being diminished just as rapidly as the technology is advancing.
Social Media and Trading
The pervasiveness of social media has extended in the world of trading. There are countless tradng sites and platforms where people swap information, tips, and guides on the internet, and even so-called ‘trading gurus’ that hold their subscribers’ hands as they navigate the trading landscape. Millennials are rather adept at figuring out this new, information dense reality, but older traders still lag slightly. If recent trends are anything to go by, it looks as though we can only expect to see more innovations and evolution in this regard.
There are new apps, systems, and trading addons being launched every day, and more and more people are gaining access to the trading field as well. We have technology to thank for the changes we’ve seen, for better or worse. Whatever else the future might hold for us, it’s a safe bet that technology’s impact in the world of trading will continue to be felt for a long time to come.