Investing Tips – A Fast-Changing World
The world is changing fast. All sectors are being interrupted by a certain technology. The hospitality industry has been disrupted by new technologies such as AirBnB which owns more rooms than Hilton hotel which has existed for decades. The transportation industry has been disrupted by new technologies such as Uber and Tesla Motors. The agricultural sector has been disrupted by new technologies in forecasting and in Genetically Modified Organisms (GMOs). On the other hand, the financial sector has seen major disruptions. In the past, trading was only limited to huge investment banks and high net-worth individuals. Individuals with shallow pockets could not participate because of the huge barriers involved. Here are the five key trends and investing tips to watch out in trading and investing.
#1 – Quant Revolution
One of the most interesting trend to watch out for is on the future of trading. Today, most hedge fund managers and individual traders are turning to robots to boost their trading. As a result, they are spending a lot of time creating software and robots to make trading easy, accurate, and predictable. This has been influenced by the massive success quant hedge funds have achieved in the recent past. They have made money in a period when most hedge funds have suffered major losses. Traditionally, for one to create a robo-advisor, one needed to have a lot of experience as a coder. One needed to have excellent IT skills such as MATLAB. Today, this has been replaced by newer drag and drop techniques which enable anyone to create their own robo advisors.
#2 – Social Trading
Social media has changed how people interact with one another. It has changed how information is shared and how people interact with one another. Social media technology is now used in major decisions. In addition, it has been incorporated in the finance and investment field. New tools such as Etoro which enables one to copy trades from other experienced traders is now very common. In the Bloomberg Terminal, the social media aspect has been incorporated in the way investors chat with one another. In future, this trend is expected to continue as people continue to appreciate the power of sharing.
#3 – Path to Mini
In the past, investing was reserved to institutions and people with deep pockets. This is because the expenses of investing did not make any sense to people with limited amount of capital. As technology progressed, more players came to the industry. This made it possible for little people to trade their capital in the financial markets at home. Today, there are thousands of brokers who make it possible for people to trade with as low as $200 in their accounts. This was not possible back in the day. In future, the financial institutions in the sector will increase their focus on small people because this is where their most growth will come from.
#4 – New Products
As more people get involved in the financial market, more products and services will be innovated. Innovation is today playing a very important role as more financial products are being developed. Binary Options were introduced less than 10 years ago. Today, thousands of brokers are involved in this market. In addition, millions of people are involved in the market. Other products such as ETFs and complex derivatives have been introduced. Also, it is possible to trade items such as weather that were not tradeable in the past.
#5 – Move to Emerging Markets
For investors in the developed markets, the future will be in the emerging and developing markets. This past week, a large Japanese delegation gathered in Nairobi for the Tokyo International Conference for African Development (TICAD). China has invested vastly in Africa. This trend shows that the future of investment will be in the countries that are growing. This will present a lot of opportunities for investors and people in the finance world.