Technology and its impact on Stock Trading

Technology is permeating everyday life like never before.In the recent world, technology is developing at a very fast pace and people from different fields of the world are making many additions to it. It is impossible to ignore the impact of technology on our daily lives.

The technological advancements are playing very important role in our lives, and we are getting addicted to them.Everything has its pros and cons; similarly, there are both the positive and negative effects of technology. Only it depends on the way we use the things. We need to understand that how technology developed in past few decades and how it brought benefits for us and how it made our lives harder. Without any doubt, technology has left its marks in every field, including business, culture, economy, education and our lifestyles. We should be aware of the fact that how its effects on society were destructive or how they were advantageous.

Technology also have its impact on Stock Trading.There was a time when boisterous traders at the Stock Exchanges yelled out orders to each other, creating a raucous din. When a stock traded on the strength of a news story, traders gathered in the stock’s trading area and started shouting matches that sounded like brawls. Today’s high-tech trading goes on without the shouting, and offers investors efficient ways to research and purchase stocks.

Investors have unprecedented access to information about companies and their stocks. The Internet provides current stock prices, company earnings reports, and breaking news about stocks and the companies issuing those stocks. Financial advisers can relay current developments to their clients, and companies can track the performance of their stock in real time. The result of this nearly instantaneous information is better-informed investors, traders and advisers.

Computer systems record buy and sell orders so quickly that investors can know their price and other details within seconds. In addition, because electronic trading eliminates handling of transactions by people, errors have become infrequent. Though the long-established standard of three days remains in effect for verification that money has changed hands and the shares have been recorded in the buyer’s account, in practice, electronic trades accomplish all of that in seconds.

Electronic trading has encouraged the phenomenon of high-frequency trading. People using this trading style buy and sell stocks within the same day, sometimes executing a full buy-and-sell cycle within minutes. Though this gave rise to what is commonly called “day trading” for individuals, the true impact comes from institutional investors who initiate trades in millions of shares in a matter of moments. This can trigger a buying or selling frenzy among other investors who want to participate in what they see as a trend developing in a particular stock. This type of trading was unavailable when trading was much slower.

Many institutional investors, such as mutual funds, hedge funds and pension funds, use programs to buy and sell stocks. This can result in a sudden sell-off or purchase of stocks, because the program has a specific date and time to make the trade. Investors can be fooled by the sudden volume. In addition, some institutional investors experience technology glitches that can trigger sudden buying and selling. These events can put traders in a panic, because they see no news to justify the trades, and assume that they should buy or sell the stock so they can be in on the action.

Many Brokerage Firms, nowadays offer API (Application Programming Interface) to their clients.With this API, one can access their trading account, place orders and get real time quotes.Many advanced TA and charting software’s make Technical Analysis very easy and cost effective.

There is no doubt that the Technology made Stock Trading more attractive and efficient.



Professional Derivative Trader With Over A Decade of Experience. Previously worked in an Engineering and Mathematical background.


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