How Has Technology Impacted the Investment Market?
It can be hard to quantify the exact size of the global technology market, thanks to its innate diversity and the wide range of applications that it influences.
However, the global tech industry is thought to have seen its value peak at $4.8 trillion at the end of 2020, while the innovations included within this market combined to change almost every aspect of our everyday lives.
The investment market is now exception to this rule, with technological advancement having helped deliver various asset classes and trading platforms to developing economies such as Africa. But how exactly has technology impacted on the world’s investment markets, and how has this benefited individual traders?
The General Role of Tech in Investment and Key Innovations
In general terms, technology has removed many of the historic barriers to entry that once surrounded the world’s investment markets, particularly derivative assets such as forex.
This is best embodied by the rise of regulated and online forex broker sites, which have seamlessly connected traders across the globe to a huge range of markets securely and in real-time.
Such platforms are largely underpinned by increased computing power and data storage capacity, which has allowed traders to analyse more detailed sources of information in order to make increasingly informed decisions over time.
It has also laid the foundation for artificial intelligence and machine learning to shape the modern day investment market, with AI dependent on vast datasets to create automated solutions to everyday trading challenges.
While terms such as AI and machine learning are often used interchangeably, the latter actually compliments the former by allowing computers and algorithms to learn without there being an explicit program. Crucially, this allows for real-time adjustments when new information is presented, which is absolutely crucial when trading in volatile entities such as the foreign exchange.
Arguably, machine learning is the single most influential trading technology in 2021, as it continues to shape contemporary investment strategies and incorporate structured data to extract both topic and sentiment from text sources (including social media and even earnings calls).
How Have Such Innovations Impacted on Individual Investors?
The question that remains, of course, is how are these innovations impacting on trading and individual investors?
Certainly, the rise of forex brokerage sites and similar entities has narrowed the once cavernous gap between institutional and retail traders in regions such as South Africa, making a raft of markets and assets far more accessible to a brand new generation.
Such platforms have also made it easier for even novice and part-time traders to learn about individual market fundamentals and key technical indicators, which can highlight critical trends that help to optimise profitability in a short period of time.
The rise of online and regulated brokers (which incorporate many of the technologies listed above) has also helped to reduce commissions.
This has also made the financial marketplace more accessible to investors in poorer and developing regions, allowing them to maximise their profits regardless of their preferred markets and asset classes.