How Technology Is Transforming the Dynamics of the Trading Floor

By Lexie Tanner 10 months ago

In the past, trading was not for everyone. The stock market was only accessible to those with possibility and great skill. One miscalculation and you could end up losing your entire fortune.

The risk is still there, due to the stock market’s volatility. That being said, thanks to technology, trading has become accessible to all types of investors. The dynamics of the trading floors have changed, which is why there is a significant increase in the number of traders.

Benefits of Technology in Trading

There are many concerns regarding the fact that technology use takes out the “heart” of the trading process. AI systems have taken over, which means it is no longer up to the people to reach success – it’s up to the machine.

On the other hand, it is undeniable that the benefits of tech in trading outweigh the disadvantages. For one, it has increased the accessibility of trading. Thanks to the Internet and the introduction of mobile devices, the market has been opened to a larger category of people.

With the introduction of the MetaTrader4 platform, every person with a smartphone can now download a trading app. Since an average of 78% of people own a smartphone, the statistics look relatively promising to the world of investing.

How the Trading Floor Was Changed By Technology

The evolution of technology has revolutionized the world of trading through three stages. These are:

  • Electronification

In the past, communication between traders was unstructured. Voice and manual trades were difficult to do, which reduced workflow efficiency. By the time you managed to make a trade, there was a good chance the trader would be losing.

With electronification, unstructured communications became structured and very easy to use. Trading was not only limited to specific areas – it was now set on a global basis. For example, you could easily find American or international forex brokers that accept US traders without any issues.

  • Automation

Automation is perhaps one of the best things that happened to the trading floor, as it made things much easier for traders. It is more cost-effective as compared to manual processes, and also more likely to deliver quick results.

Automation relies on algorithms and existent data to perform a trade. This allows traders with little to no experience to automate their trades and perhaps even mirror professional traders. It’s a quicker and much more organized way of making a successful trade.

  • Digitization

Digitization opened multiple doors for data analysis, improving the decision-making process. This way, traders can put their focus on value-added tasks such as complex data analysis or deal origination. Thanks to digitization, traders may also leverage alternative data sets such as satellite images or social sentiment.

The Bottom Line

Technology makes it possible for people to climb the trading ladder, even without being part of the financial sector. Anyone with a smartphone and enough dedication can step onto the trading floor. Manual effort and decision-making will still be necessary, but technology makes everything much easier.