Saturday, December 5, 2020

The Impact of Technology on the Stock Market

If you are a trader in the stock market, you understand that there is a need to stay updated. How difficult could that be without technology? In the past, the stock market was more of a physical location where people would meet and trade the stocks. With the evolution of technology, traders check the stock market platforms from their computers or phones from wherever they are.

The stock market is an investment like any other. It needs commitment and knowledge to avoid losses. It is essential to understand what you are getting yourself into. Look into the company you are buying stocks from and understand its earnings reports. Earnings reports can help you predict whether the stock's price will rise or fall in the next trading period. Learn more on the use of earnings reports in the fundamental analysis of stocks.


Five ways technology has helped the stock market


1. Effectiveness and efficiency in stocks trading

Imagining how the stock market was twenty years ago is proof that modern technology has an impact on the stock market. Technology keeps growing, and the stock market has adopted the latest technology to keep advancing. Two decades ago, the stock market was associated with the rich. Today, everyone can comfortably participate in the stock market. There is value for time; you do not have to go to a physical market to trade. You can comfortably trade from wherever you are using a computer or mobile phone.

The worldwide web is an informative tool for the stock market. If you are interested in what's new in all the securities market, all you need is internet access. Removal of technology today would mean a drastic fall and huge losses in the stock market.


2. Security in the stock market

Technology has brought the aspect of security and trustworthiness in the stock market. Technology has improved the market's standard by ensuring that people can see what is happening in real-time. A while ago, people physically handled all the investments. That was a great source of errors and fraud in the stock market, and therefore it was not an option for many people.

Today, trading is almost one hundred percent error-free with secure algorithms and robust systems in the market. Computers are more trusted when it comes to the execution of trades.


3. High speeds of trading

Technology has helped the stock market to have high-frequency trading. A few years ago, an investor would trade on the stock market and wait for days to know their investment outcome. Today, traders can buy and sell stocks within the same day. They have to look out for opportunities where the prices appreciate for them to have made a profit. This is referred to as day trading.


4. Electronic trading using online platforms


Today some platforms help traders place orders over networks with financial intermediaries. The stock market has been embedded in technology such that most markets are online. Buyers and sellers meet on a platform over the internet and exchange the stocks electronically. Decades ago, the stock market was done on calculators and many phone calls. The many platforms in the market traders do not have to meet or call but use the platform to open and close their stock business. There is 24 hours trading on online trading platforms for five days a week, making the market convenient for people even in different time zones.


5. Automated trading in the stock market


Technology has brought about the aspect of automatic trading in the stock market. People who consider themselves gurus create robots to trade for them when they are away. This means that when there is a signal that a stock you had bought is selling at a good rate, the robot goes ahead and makes the sale.

Technology positively influences the stock market. Though it has caused panic to traders by false signals, there has always been a way of correcting that before a lot of damage. Technology has brought a new revolution to the stock market, and that is why it keeps thriving and getting more people interested in the investment.


Photo by Artem Podrez from Pexels


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