How has technology impacted share trading

Perhaps no longer than three decades ago, traders had to scream across the trading floor to place their buy and sell orders. Before that, traders had to plot technical indicators on the charts themselves, which was not possible from the trading floor.

Thankfully, the digital revolution has changed all that. Today, you can buy and sell shares from the comfort of your couch. Not only that, but you can also plot technical indicators, the economic calendar, analyst recommendations, and geopolitical news on and next to your charts. The results are an immersive trading experience that was not available to our fathers and grandfathers.

1. The rise of digital trading platforms

More advanced trading technology has made trading more accessible to the general public. The efficiency and velocity at which you could open an account and the vast opportunities available in the markets made it encouraging for the average layman to test the trading waters.

Merely two documents (Proof of identity and proof of address) are required for you today to open an account with your broker of choice. Not only that, but you can now choose from many different platforms to use for your share trading activities. Both the number of retail traders and the volumes being traded have risen as a result. Statistics show that indeed equity (shares) trading volume has increased recently.

2. More capital flowing into the markets

As more traders enter into the market, given the ease of access to share trading services, more capital enters the markets. In general, this can lead to higher asset prices but not necessarily.

In practice, more liquidity in the market means lower transaction costs, enabling you to use high-frequency trading strategies without worrying about accumulating spreads and commissions. More capital flow can mean better economic activity, and that funds go to the place where they are needed.

Moreover, the advent of digital trading platforms has enabled many brokers to offer leverage, allowing traders to trade with an amount of money that is bigger than the capital they have deposited. There are many trading platforms with influence today that enable you to do that.

The increase in trading activity mainly was noted in the forex markets, as retail traders flooded to find good opportunities there, which exist. Today, some estimate that over 5 trillion dollars are exchanged daily in forex trading volume. This has led to a remarkable reduction in costs for traders.

3. Plethora of information

The saying goes that today we have a lot of information but little wisdom. This is true in the share market as well. The rise of technology has given traders access to various trading sources. There is plenty of analysis and market reports.

However, it isn’t easy to find a good and reliable source of information. Even if you did, you would need to use your analysis as well. You should not blindly trust any single source of analysis without critical thinking and careful risk management.

Suppose you are too dependent on research presented to you. In that case, it is recommended that you address your reliance on trading analysis sources and develop your thinking and frameworks to trade successfully.

Conclusion

The digital revolution has made share trading available for anyone who wishes to join. However, it has also made it difficult to find high-quality information. You need to think independently and have your analysis to navigate your way in the markets successfully.