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Technology in the Financial Markets: How Does it Benefit Traders?

In the 1980’s, trading was a specialized past time that only appealed to professional investors with the backing of large financial institutions. This was a reflection of the nature of the stock and financial markets during this time, whereby the majority of transactions were conducted by telephone and third party brokers had to be relied upon to effect swift transactions.

Fast forward to 2012, and the financial markets have changed beyond all recognition. Not only has technological advancement created entirely new methods of trading and investing, but it has also helped to evolve trading into a far more accessible practice for individuals who wish to operate individually or on a part time basis.

Trading in 2012: The 3 Main Benefits of Technological Advancement

So where can the core benefits of technological advancement be seen in the financial markets? While the change may have been widespread, there are certain features of contemporary trading that owe everything to continued innovation and the drive to make it accessible to a wider social demographic.

The Speed of Order Execution: While some markets may be more time sensitive than others, all trading platforms place a certain emphasis on real time transaction. This was simply not possible for independent traders decades ago, as they did not have the access to technology boasted by established industry professionals. Today, however, Direct Access Trading Systems (DAT’s) provide investors with instant access to global markets and efficient electronic communication networks, with the result that orders can be executed instantly in reaction to live market events.

The Development of Charting Tools and Online Trading Platforms: The modern trader, whether they are working on behalf of a financial leader or operating on an independent and part time basis, has access to a number of tools that were simply unheard of in 1980. With a number of variable online trading platforms to select from and the potential to customize innovative charting tools for improved market analysis, aspiring investors are given the best possible chance of minimizing their financial risk in 2012.

The Provision of Online Education Programs: Many people misunderstand technology, and the fact that ultimately it is only as effective as the people who use it. This is especially true in the open financial markets, where it is each independent traders responsibility to develop an in-depth market knowledge prior to investing their cash. Many online brokers and platforms offer outstanding levels of educational support to aspiring traders, so that they can thrive regardless of their background or existing level of experience.

The Bottom Line

The fact that the latter benefit is not available through all online brokers is telling, as it proves that some platforms are more advanced than others when it comes to providing a complete trading experience. While technological advancement has been crucial to making trading more accessible, it means little if investors enter the market ill prepared or without the requisite market knowledge to turn a profit. To discover a resource that offers both education and support to traders in their quest to prosper within an evolving market, use online resources and find the best solution for you.

Author Biography: Lewis Humphries is a professional blogger and freelance researcher for numerous independent firms, including CMC Markets. To understand more about how technology has helped to evolve the financial markets, then click here.

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