The Finance & Technology Amalgamation
The evolution within the finance industry has been on an unprecedented level, especially with the advent of Fintech companies that have redefined the finance and banking experience. Fintech can be explained as an amalgamation of finance with technology that aims to cover the shortcomings of traditional financial services.
The traditional banking processes were far more complex and overwhelming for a commoner. Companies are leveraging technology to create more transparency in the system and improve the experience. There are many types of Fintech companies that cover a broad spectrum of financial products and services. In addition to mainstream finance, the Fintech segment has almost influenced the entire trading landscape.
This implication of finance with improved transparency has been at the core of the Fintech companies. The revolutionary amalgamation has helped to bring trading to the masses. The candlesticks charts and bar graphs are not that overwhelming now. Understanding complex circumstances like wash sales are also easier. Earlier trading was limited to experts in the financial domain. Whether it was a Forex trade or a stock trading, it required core technical knowledge.
Now, this is no longer the case. This transformation has been largely possible due to deep internet penetration and the easy availability of real-time data in the modern world. The presence of payment applications that enables transactions using internet-powered smart devices has also helped in the proliferation of mainstream trading.
Do you remember how hard it was to transfer funds before the internet was mainstream and digital banking became the norm? Trading was even harder for people back then, but today it is as easy as making a mobile payment using your smartphone. Applications like Python have made it easier to develop trading platforms. Python correlation can even help you establish a link between stocks of two or more firms and simplify your trading analysis. Let’s peep into how technology has simplified trading in 2020.
The difficult access was one of the major roadblocks to people who wanted to join the trading industry and try it as a career option. Trading had restricted access back in the days and was limited to institutional traders.
Technological advancements have made it possible for even retail investors to participate in the trading segment. It’s more streamlined and easily accessible through smartphone applications that have made it simple to trade online. Earlier traders had a limit of trading time; it varied depending upon the geographical location of the trader.
With increased globalization and progressive technology, it is not time-bound. If one trading zone like Europe is closed, there are plenty of other options like Asia where markets must be running. These virtual trading platforms have 24 hours access to markets from multiple continents.
Artificial Intelligence technology has made our lives easier; it complements human efforts with technological sophistication and brings out the most efficient outcome. Automation plays a huge role in the efficient execution of trades by reducing the time taken to execute.
The need for a mediator or a dealer to facilitate trading transactions has been minimized and almost eliminated. This has also reduced the chances of random human errors. Slippages are also reduced to a great extent by adopting automated execution technology.
An automated execution system also adds value by allowing traders to take advantage of trading signals. A trader can act on the buy or sell signal generated by the automation system. The automated algorithms ensure that the traders don’t miss out on profitable trading opportunities.
Faster Trading Time
If you rewind to the late 20th or the early 21st century, you will find that trading required as much patience as the level of technical skills. People had to wait for days to fulfil a trading transaction or even to obtain the latest news from the stock exchanges. Due to the absence of digital communication media, there was a lack of real-time updates from the market.
People had to rely on old news to make future projections. In today’s digital era, obtaining real-time information is easier than ever. All you have to do is use any internet-powered device and surf the web. In addition to this, the automated execution systems have made it easier and faster to place trades with predefined rules.
Online Trading and Mobile-Based Applications
The introduction of online traders has limited the role of brokers to a great extent. Before the existence and proliferation of online trading systems, traders had to call their financial advisors and brokers to place a trade.
Commissions for these brokerage services were as high as 2% on every executed order. In the digital age, the trading landscape has further evolved with smartphone applications catering to the need of traders and trading enthusiasts.
The user-friendly interface in the mobile trading app has made it easier for the beginners in the trading industry. The mobile trading applications have an added advantage for Forex traders and in short-term trades like CFD holdings. From managing and monitoring real-time updates to making customized watch lists, these mobile trading applications have a whole lot to offer.
Various crowd-sourced trading platforms can help you to build a relationship with top traders in the industry on social trading platforms. In the crowd-source models, anyone with an internet-powered device can be involved in algorithm trading.
By designing a trading algorithm using free tools and proving that it works, you can invite people to invest capital in your trading strategy and can divide profits based on your agreements. The crowd-sourcing method of trading has even discarded the need for traders to attain exceptional levels for them to trade big amounts.
Technology has drastically transformed the trading industry. From paper trading to electronic platforms and now smartphone trading applications, the trading process has evolved a lot with the evolution of technology.
The automation has made it easier to place trades quickly and efficiently without the need for a broker, and it has also reduced the probability of random human errors. All in all, the trading process has been simplified for a layman to understand and participate in this industry.