Four Crucial Technologies in the Trading Industry

Over the years, the financial markets have undergone many revolutions, each transforming the ways that investors are able to manage their portfolios.

10:00 08 February 2024

Over the years, the financial markets have undergone many revolutions, each transforming the ways that investors are able to manage their portfolios. From cutting-edge trading platforms that let you invest with ease to powerful artificial intelligence algorithms, technology is the life and blood that keeps the trading industry thriving. 

Understanding the different technologies and how they work can help you better incorporate them into your trading plan. With that in mind, we’ll discuss four crucial technologies in the trading industry below.

• Trading platforms 

Trading platforms are software systems that enable users to trade on financial markets digitally. They often also offer additional features that help investors inform their trading strategy, such as news feeds, real-time pricing, interactive charts and technical analysis tools. Originally, these innovative platforms were only accessible by computer, but nowadays most platforms have mobile apps that offer the full functionality of their desktop counterparts. 

This technology has played a critical role in making trading accessible to more people than ever before. Today, anyone can open a trading platform account and start buying and selling securities from the comfort of their home.

• Technical analysis tools

Also known as trading indicators, technical analysis tools facilitate the study of price movements using digital charts. These charts show visual representations of mathematical calculations that help traders identify emerging trends and signals in the markets they trade. From Bollinger bands to Ichimoku Cloud, trading indicators allow traders to easily inform their strategy with hard data so that they can make the right decisions when the opportunity arises.

• Automated trading systems

Sometimes also referred to as mechanical trading systems, automated trading systems allow traders to programme computers to execute trades in a specific way. Users can establish precise rules that determine how computer software behaves, allowing them to carry out their trading plan without any interference from the trader’s emotional biases.

 Trading using this technology is also more conducive to better seizing opportunities and avoiding risks, as the computer programmes can process the correct decision according to the rules far faster than the trader would be able to.

• Artificial intelligence (AI)

Thanks to the emergence of artificial intelligence, human decision-making is starting to play a less significant role in trading. Using the power of predictive analytics and machine learning, AI algorithms are able to analyse historical market and stock data, generate investment ideas, build portfolios and more. 

The key strength of AI systems for trading is that they’re able to process millions of data points in minimal time, capturing information that neither human beings nor statistical models couldn’t hope to on their own.

Which of these technologies do you think is most crucial for the trading industry? Share your thoughts with us in the comments.