Earlier trading was done in the physical form of shares and that too by visiting the stock market. But, today with advancements in technology everything is available online. One can choose their favourite stock and place the order by enjoying the comfort of their home. Apart from making the market easily accessible, the advancement has also helped a lot with the safety and security of investors’ data. This has been done by introducing demat accounts, which allow investors to hold their securities in electronic form. This article discusses how digitalisation has changed stock trading and what can be the future of stock trading.
Impact of Digitalisation on Stock Trading
With the advancement in technology, everything has been digitalised. This digitalisation has provided many benefits such as quick availability of services. Earlier banking services could be availed only by visiting physical banking branches., but now they’re available online. Similar is the case with stock trading where earlier people had to do multiple visits to the stock market and now they can easily open an account online.
Emergence of Trading Platforms
Trading platforms are online stock market interfaces that let traders place buy and sell orders from the comfort of their homes or from anywhere remotely. Apart from order placement, these platforms offer important tools like live market updates, research tools, and company data for informed decision-making. The platforms offer user-friendly interfaces which easily help to navigate to different sections of the platform.
Introduction of Mobile Trading
Online trading platforms saved traders from the trouble of visiting the stock market several times. But to track the stock they had to sit in front of their desktops all the time. This created a need to introduce a mobile-friendly demat account app so that anyone can hold their securities on their mobile phone. Also, soon brokers understood the importance of coming up with their trading apps which helped with executing quick trades, etc.
Algorithmic Trading
Algorithmic trading is a set of instructions given to the computer to execute a trade when specific criteria are met. This helped traders or brokers who handled multiple accounts or trades in easily execute them. Apart from this, traders were able to put most of their attention to more important tasks or trades that required more attention. Apart from this, even AI helps with analysing huge amounts of data and trading patterns.
Real-Time Market Data
Live market updates help traders make quick decisions regarding tracking and executing of stocks. These updates can be of different types such as live market prices of stocks, market trends, market news, etc. This guides them about the right timing of entering and exiting the market. The data also helps traders in comparing different stocks and deciding which one to invest in.
Executing Orders
Trading platforms have something called the “electronic communication networks” which help in placing and executing stock orders with speed and accuracy. This helps to easily connect traders with the stock market platform and place quick orders. This quickness is maintained because there are no middlemen in the process. Apart from this, traders get to enjoy the best available prices.
Technical Analysis Tools
Modern stock trading offers demat apps, which make trading quickly accessible with just a few taps on your phone. These apps offer various technical analysis tools like charts, indicators, etc which help to get an idea of how the market is working. They do this by assisting traders in identifying the market trends which in turn help traders in choosing the right entry and exit point of their trades.
Risk Management
The stock market offers heavy returns but the risks attached to these investments are huge too. This makes it crucial to study both returns and risks attached to a stock before making an investment decision. If one is unsure about a stock after selecting it, then one can always use several risk-mitigating tools to save oneself from the potential risks. Tools like, stop loss orders, limit orders, etc easily help a trader to avoid unnecessary risks.
Future of Stock Trading
Before making an investment decision in any type of investment instrument we analyse all the benefits and risks attached to it. Similar is the case with stock trading as well as it involves huge risks. Though it offers automation and quick execution with the help of various algorithms, it can make errors which can harm your trades. So, personal analysis and evaluation are always important. Apart from this, one must know what are the future trends in stock trading so that one can make the most out of it.
Conclusion
Stock Trading has evolved a lot in the past few years which made trading and investing easily available to all types of people. Modern trading introduced mobile trading, algorithmic trading, and easy access to various trading platforms. The other benefits offered by this evolution are technical analysis tools, easy risk management, etc.
