Technology has had a lasting impact on many areas of everyday life, but one of the greatest impacts it has had has been on the stock market and trading in general.
Movies and TV Shows will portray and reference the New York Stock Exchange back to its original version of people yelling and arguing over prices and exchanges, but in reality technology has changed the very atmosphere that investors research, buy and exchange stocks in. Now, rather than being in a big room arguing back and forth, stocks can be bought and exchanged at any time from anywhere in the world. The atmosphere is not the only thing that technology has changed.
Research, frequency and execution are three of the main areas that have seen change when it comes to the stock market and technology. Investors now have an unlimited amount of access to information about businesses and their stocks. According to Kevin Johnston, a writer for Ameriprise Financial, financial advisors can now relay current developments in real time and the results of this nearly instantaneous information is more informed investors, trades and advisers.
Michael McCarthy, chief market strategist at CMC Markets, pointed out in an article by Finance Magnates that the role of technology in the financial markets and trading industry is to make a much more competitive landscape. McCarthy stated, “In a way, technology has forced brokers and platform provides to lift their game and enhance their offerings.” According to the Bank for International Settlements (BIS), during the early ‘90s there was $1.2 trillion Over The Counter Market (OTC) in spot FX comprise mostly of voice-traded execution, and now there are more than $5.2 trillion traded with 50-60 percent executed electronically.
With quick and efficient access to research and stocks, the frequency in trades has skyrocketed. Vito Henjoto, Director at Zenifix, a marketing consulting firm that provides a professional and independent outlook of the financial market, stated in an article for Finance Magnates that the biggest game changer brought by technology was that he was no longer tied down to a desktop, but can now trade on the go through his phone or tablet. What before may have taken 24 hours or even a couple days, can now be done in a split second. The way that trades are now executed has also aided in the increase in frequency of trades. According to Johnston in a Zacks article, The Impact of Technology on the Stock Market, electronic trading eliminates handling of transactions by people, and therefore errors have become infrequent.
The ease of access has not only created a higher frequency in trades, but it has also sparked the interest of everyday people. Now anyone can join part in the ever-growing market of trades. There is no doubt that as time goes on, the trade market will continue to grow and evolve as technology continues to grow and evolve.
By: Christa Vandenburgh