Trading World – What Is Changing So Far
Technology is changing virtually all sectors in the economy. The hotel industry has been disrupted by AirB&B, the transport sector by Uber, and the stock trading sector by Robinhood. New disruptive technologies are changing old industries. The trading sector has also been disrupted heavily. In the past, trading was a reserve for the big banks and huge hedge funds. It was impossible for a person with $10,000 to start trading. This was because they didn’t have the technology to do so. Today, it is however possible for anyone around the world to trade. I have friends in countries like Niger who trade the international finance markets. In this article, I will highlight a few innovations that are changing the trading world.
#1 – Social Trading
One of the most common challenges for new traders is on how to master the art and science of trading world. Many people want to trade but they are scared of taking the narrow path to trading. Social trading is therefore the solution to this. In social trading, a new trader with no knowledge on trading copies the trades of successful traders. By doing this, the trader is at a good position of leveraging the success of the professional trader without even knowing what trading is. Many social trading platforms have been developed and traders are taking advantage of them. However, it is important for the trader to first do due diligence before copying a certain trader. The trader also needs to understand that anyone in the financial market can lose money. Therefore, the concept of capital allocation should be very clear to the trader. In addition, new social tools such as StockTwits which is the Twitter for financial market have come up. These tools allow an individual to access the information from the crowd and make decisions accordingly.
#2 – Quant Trading Simplified
Quant trading is also known as algorithmic trading. It is the concept of using mathematical formulas to predict the direction of the market. In the past, quant traders needed to have a lot of knowledge on mathematics and software programing. Concepts of MATLAB were a must for the traders. As a result, only a few people embraced this concept. Today, brokers have created new tools to help traders without any such background to become better traders. They have new drag and drop tools that many traders have embraced. With these tools, all you have to do is drag and drop the technical indicators you want to use and then place a function.
#3 – Trading News and Data
To be a successful trader, data is a very important concept. The financial and geo-political news that come up are also very important in determining the movements of the instruments. In the past, getting accurate data and news has been made easy. In the past, professional traders had to pay more than $20,000 per month for the Bloomberg Terminal. Today, even without paying a dime, it is possible to get the same information the professional traders get. Tools such as Estimize that allow anybody to predict the financial data have become very common. In addition to this, a number of businesses offering real-time financial news have come up and traders are taking advantage of them. In addition, tools such as Seeking Alpha enable a person to get credible research from investors from around the trading world. Traditionally, this research was only accessible to huge investors who were willing to pay thousands of dollars for a research.
#4 – New Cost Cutting Tools
Trading is expensive in terms of commissions the brokers charge. New products aimed at addressing this problem have come up. Robinhood is one of the most common tool for traders conscious about saving money. Robinhood is a mobile app that allow a person to trade without paying the hefty commissions. It also allows a person to trade with as little as $200. The advantage of this is that it allows a person to maximize on the profits.
Trading World – Useful Links
- To learn more about the changes of the Trading World Landscape, read SunGuard
- Read more about the new Trading World scenario on Deloitte