In this post, I will
discuss how technology changed the landscape of trading and investing.
Reading Time: 5 minutes Financial activity: Trading/Investing Knowledge level: Beginner
Summary
The past and the
current situation
Some ways in which
technology is impacting investment practices, today
Conclusions
The past and the current situation
Technology has played a
significant role in transforming modern investment practices.
Until the last century,
we had to use newspapers to read the values of the financial instruments that
interested us and then we had to call our bank on the phone or go there in
person, to give a purchase or sale order.
The bank, having
received the order, telephoned the broker who operated on the stock exchange,
who provided his employees with a sheet with the operations to be carried out
in the stock exchange's shouting area. Therefore, the stock exchange was a
physical place, with human operators shouting out orders, and not a virtual
place, as is the case today.
So, with a personal
computer and a connection to the internet, we can do all this job in seconds,
not in days! You know this fact very well.
Some ways in which technology is impacting investment practices, today
Access to information
and digital communications: we are no longer forced to buy and read a printed newspaper!
It is no longer necessary to take a train or plane to go to another city and
attend a training course or conference: via the Internet, we can access all the
webinars we want!
Investors can now find
competent financial advisors through online searches to help them make the best
decisions for their funds.
Technology has made it easier
for investors and traders to access a wealth of financial and market
information in real-time. This includes access to news, stocks’ values,
financial statements, research reports, and other market data, which can help traders/investors
make more informed investment decisions.
So, technology has
played a significant role in improving transparency in the investment industry
by providing investors with greater access to information, automating
investment processes, and enabling new investment strategies.
You can start your information research from popular internet portals like Google Finance or Yahoo Finance, and then you can visit institutional sites like CFTC (if you want to read some COT) or St. Louis FRED (if you need economic data).
Trading automation and
digital platforms: technology has enabled the automation of many investment
processes, such as trading, and portfolio management. You know that I am an
algorithmic trader, without technology I would not exist!
Digital platforms have
made it easier for traders to access a wide range of investment products and
services. This includes online trading platforms, automated trading strategies,
and social investing platforms, too.
If you want to try to code your first automated strategy you can read this post: A step-by-step guide to code your first automated strategy in TradingView.
Machine learning and large data analysis. Machine learning techniques can help traders/investors make smarter decisions about where they put their money in the market. AI-powered self-learning, automated trading platforms use machine learning, sentiment analysis, and complex algorithmic predictions to analyze millions of data points and execute trades at the optimal price. AI traders also analyze forecast markets with accuracy and efficiency to mitigate risks and provide higher returns. Technology has enabled investors to analyze large amounts of data quickly and accurately (Read my two posts about Jim Simons: My research about the strategies used by Jim Simons and More lessons I learned from Jim Simons).
Blockchain technology. Blockchain
technology, which underpins cryptocurrencies such as the famous Bitcoin, has
the potential to transform all investment practices by enabling faster and more
secure transactions and reducing the need for intermediaries.
Conclusions
Why did I write this post
about things that, after all, are known to everyone?
Overall, technology has
transformed investment practices by increasing access to information, improving
efficiency, and enabling new investment strategies. It is likely to have an
even greater impact on the investment industry. Traders and investors who
embrace these advancements and use them to their advantage will be able to reap
the benefits of the new investment landscape.
Therefore, this post is
above all an invitation to all traders to dedicate part of their time to
researching and updating their knowledge, because the world of finance is
constantly and very rapidly evolving.
A sincere wish of good
work to all!
Written by F. GRAMOLA
(*).
(*) Member of S.I.A.T.,
the Italian Society of Technical Analysis (member society of I.F.T.A. –
International Federation of Technical Analysts).
Warning
We merely cite our
personal opinions for educational purposes only.
All trademarks are the
property of their respective owners.
Investing and trading
are risky. Don't invest or trade money that you cannot afford to lose.
Initial photo by Nejc Soklič on Unsplash.
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