What Role does Technology play in the Stock Market?

If you were to look around, you cannot discount the role of technology in modern-day life. Whether it’s about socializing, commuting, spending, learning or anything else, technology has played a major role all around. We are at that stage where envisioning life without technology is a foregone conclusion.

The influence of technology has grown over the years to such an extent that even the facets like an investment and stock market are getting a taste of it. And rightly so, technology has changed the face of how investing is done. We here look at how technology has changed the course of the stock market and the role played by technology in the stock market. Read along.

The History of Stock Market- From floors to Computer Systems

The word stock market and investment for years were synonymous with the image of people shouting out the buying and selling orders on the floor of the stock exchange. Only when the telephone made a major breakthrough, that the use of technology was first recorded. That led the way to the introduction of computers later on during the ’90s. And the rest as we say is history.

When you compare the same with the modern-day stock market, technology is at the very core of how trading or investment is done. Everything revolving from orders to transfers is done via electronic mode with the use of technology.  If you look back at the historical stance about the stock market, you’d see tremendous changes that occurred as a result of the introduction of the technology. For say, the leading stock market of India, i.e. NSE and BSE are fully electronically materialized exchange.

The Role Played by Technology in Stock Market

The stock market and technology are truly an indispensable part of the present time. Technology has fundamentally altered how the financial markets are conducted right from the very first step of the formation of the stock to the trading of it.

We here look at how different technological advancements have impacted the stock market and their very role in the advancement of the investing scene.

Artificial Intelligence (AI) beckons the New era of Investment

AI is one of the hot topics when it comes to technology. It’s something that has creates waves not only in the stock market but everywhere it has been used for. Previously the stock market was merely limited to human intelligence and decision-making capabilities. But with the influx of AI, the horizons have widened plenty fold.

With AI, investment decision-making capacities tend to increase as AI tends to provide better predictions and research than a human being. It helps to keep the emotional bias in check and seek rightful investment decisions. Add the factor like the speed of thought; AI has substantially changed the stock market over the years. Many of top investment platforms and advisors are turning to AI to help gain a competitive edge.

Smartphones – The Basis for Mobility

When we talk of technology, smartphones are one of the major things we all can relate too. Think of those yesteryear’s past where corded phones were the common thing. That limited us to the confines of our home or office when it comes to communication. With the development of smartphones, these days’ people can simply know about the stock market and invest on the go. You can make the investment decisions from your very fingertips sitting anywhere around the globe. Just browse through the apps or platforms and off you go.

In fact, these days investment has become as easy as online shopping and as safe as online banking due to the advancement of technology and smartphones. You can simply browse through the investment choices, place your order as per your liking and oversee your portfolio with a single tap from your phone and make changes instantly as required for. That’s a real change from those early days of sitting at the desk yelling out the selling and buying orders and constantly having to check manually on the investment portfolio.

Helping track Personal Finance in a Click

There was an eerie time when personal finance meant noting down each of the income and expenses either on a hardcopy ledger or feeding the data into the excel sheet. Thanks to technology these have become a thing of the past. If you look closely, personal finance apps and stock market are related to each other. A person tends to invest only when he has savings or money to invest. That can only be calculated if there’s visibility about the finances of a person.

Only if a person knows his financial stance properly, shall he indulge in the stock market investment. That is where personal finance apps come into play. They help to provide the overview and can track the expenses helping an individual to manage their budget properly. That helps them set up their savings to invest in the stock market.

Big Data – The New basis of Research  

Big Data refers to the collection and analysis of a large database or datasets. It has been a major part of the modern-day functioning of the financial market. A stock market has millions of data points occurring every single day. With the use of big data, these can be substantially measured and analyzed accordingly as per the need. These data can be crucial for measuring the market sentiments, for predicting the future outcome and more. Big Data is a major basis for research in the stock market. And most of the top-level stock market advisors and investment platforms are using it.

Use of Algorithm in Stock Market

The algorithm does tend to share its base somewhat with the AI but that’s where the buck stops. Like AI, the algorithm is vital to modern-day stock trading. Such has been the nature that different algorithm trading and investing modules have been developed over time. Algorithms analyze the happenings around in the stock market and identify any liquid opportunities to help to make better and intelligent decisions when it comes to investing. For this, a pre-defined set of instructions is placed on the computer which then places the orders on behalf of the client and investors. It helps to make instant and accurate decisions all the time whilst reducing the possibility of human errors.

Development of Next Generation Online Brokers

The thing about the stock market is that we conduct the trades and investment via stock brokers. Previously when the technological advancement was not at its peak, we had to rely on the telephonic conversion or opt for manual outreach so that the deals can be made. Add to it the plentiful of papers needed, it truly was a mess. These days, the next generation online brokers allow you to venture into the stock market via your phones and internet with just a single tap.

You can conduct buying and selling of the stocks and keep stocks under the watch list for the future also from the platform offered by these online brokers.  The investment platforms offered by different online brokers have added new user-friendly interference to help entice the users and make it easy for them. The days when investment words seemed to be full of mess and time consuming are simply past the horizon due to the next generation online brokers. 

Robo Advisors Changing the Advisory Field

When the technology was still in its novice stage, the stock advisory was limited to a manual one. People opened up advisory companies and the willing investors had to either meet in person or use telephonic conversation to get those advisory services. At that time, the only promotion for the advisory was word of mouth basis. But now with the technology at the forefront, you can seek advisory services over different platforms with ease. These days you can not only seek the advisory services but also see their past performance allowing you to choose the very best and trustworthy advisors from the market.

But that doesn’t stop there; the technology has reached such a stage where the word ‘Robo Advisor’ is a true reality. With Robo Advisors, you can seek financial planning and stock market advisory with little no none human interaction. These tend to offer you better advisory tips at a pretty minimal cost and is best known for the ability to provide you with the balance between your investment portfolio and harnessing tax benefits for you wherever applicable.  Plenty of top advisory firms have developed the module of ‘Robo Advisors’ with them so as to provide the advisory services to people.

Is Technology a Boon or a Bane for Stock Market?

Technology has taken leaps and boundaries when it comes to the comparison with the scenes in the previous decades and past. It truly has made an astounding change in the lives around us. And when it comes to the stock market, the chances are pretty visible. Those days of having to rely on manual intervention and needing to compile piles of papers to apply for stocks have been left behind due to the advancement of technology. The options like investment on the go with smartphones, use of Robo advisors for best investment tips, utilizing algorithm for conducting trades that were a near impossible based on manual conduct, using big data to help research and conduct large chunk of data are a few benefits of how technology has been a boon for the stock market.

On the other hand, we can also argue that with the advancement of technology, human interaction will be a lot less and that may affect the investment factors. Also with a breakout of news like hacking and privacy concerns, your smartphone and personal finance apps can be compromised thereby putting you at a risk for data and financial loss. There are cases where Robo advisors aren’t mere enough as personalized service or customized advisory is utmost required for. This also showcases the other side of the technology in the stock market.

Taking into consideration, technology has more benefits than demerits. It has changed the way the stock market is conducted and perceived around. And more is yet to come in this technological advancement.

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