Technology has a massive impact on our lives and has improved our daily lives. Businesses, education, and government have been on the benefiting edge in regards to technology. When it comes to the stock market, technology has played a deep role in determining stock prices. The success of any stock exchange business has a huge impact on the economy of a country. Just like any business, the stock exchange business has its up and downs, but at the end of the day, profit has to be generated. Here are some ways in which technology has impacted the world of stocks.
With technology, the stock market has become a credible place. The evolution of technology has brought about increased security at the same time making transactions more practical. You can see all the details regarding the market in real life thus impacting investments.
Stock price targets mean that investors can make their informed decision based on the data presented to them. Having quick data regarding the market will make the market more accessible to all kinds of interested parties. All transactions are handled by machines and this has brought about an increase in investors as decisions are made quickly compared to when transactions were handled by humans.
Previously, the stock exchange market was run on the face to face agenda. People had to convene on a market floor and do stock exchange manually. With technology developing now and then, trading has taken a new face electronically.
Information technology deals with calculation and data just like stock trading. The match between IT and stock trading brought about an increase in efficiency and organization. The use of high-speed computers that traders use can do stock brokerage in less than a second, much more quickly than any human trading.
The introduction of algorithms into the stock market has turned around how stockbrokers decide on which stock to buy or sell. Algorithm trading is the use of computer programs that follow specific instructions on how to calculate chart patterns so as to make safe investments. In short, algorithms determine the pricing, timing, and quality of orders, monitoring market conditions over a range of securities and trading venues.
With all the advantages the algorithm has brought about, there are cases reported of people manipulating programs leading to losses.
Direct mail campaigns
Direct mail campaign is another way in which technology has impacted the stock market. The campaign aims at raising the prices of stocks more quickly. Websites and online newspapers make the effort to keep stock buyers and sellers in the know so they can make informed decisions when buying or selling.
Rise of the dot com companies
Due to the increase in internet use in the 90s, many websites that depended on selling their services and products online surged. The aim of these companies was not to make a profit, but their concentration was on building up traffic to their websites and better and faster connectivity. Connectivity saw many businesses want to venture into the futures market. Many dot com companies were able to publicly offer their stocks at high prices because of all the excitement surrounding the companies.
Even if technology brought about the growth of the dot com companies, there is a downfall to that. Social media has played a role in promoting stock prices, but a simple thing such as rumor can bring a company’s stocks down to zero. Rumors tend to inform clients of what they loved and make them prefer other options.
The sudden shift in the market prices
Even though many aspects of technology have been good, there are times when the stock market prices are triggered by false signals. With how information spreads, there are situations where misleading information has brought about a shift in the market prices. The direction of the market has left the stock market in the hands of machines due to the automation of certain aspects of technology.
Many of the automated trades are times and this gets rid of the importance of the market signal. Such trades have brought about panic and a sudden shift in the stock market. Even if technology has its disadvantages in the market, the same technology has been used to resolve some of those issues.
As discussed above, you have seen how technology has helped analyst projection in the future pricing of stocks.