A financial market is vital for the financial operations in the capitalist economy. The market plays a crucial role in trading, assets, and many others. There are several of them:
- Stocks – this is a market for selling and buying stocks in which businessmen are interested.
- Bonds – the market for issuing new debt or buying and selling of the old one.
- Derivatives – this is the financial market for trading contracts.
- Foreign exchange market – the decentralized market for currency trading.
- Commodity market – the market for buying and selling commodities, such as energy, metal, or agricultural products.
- Money market – trading in the short-term, generally with a debt.
- Real estate – generally involves agents who represent the interests of the buyers and sellers.
- Reinsurance – a market which is operated for the insurance, bought by insurance companies.
Each market may have different infrastructure, regulations, policies, or technologies. The main innovation which has lifted the development of the financial market generally, not only one field, is Distributed Ledger Technology (DLT).
The impact of technology on the Stock Market
Even though the general financial market is influenced by technological innovations, it is no surprise to anyone that the stock market is one of the most technologically advanced markets with its own benefits. It almost makes us forget about the past decade when trading was not the same as it is today. Even a little mistake can make the loss colossal for anyone, involved in the process. Let’s describe it more thoroughly, how the financial market benefits daily and how the traders themselves are influenced by the technological innovations.
The one and most important is the electronic trading system. Nowadays, everything is digitalized and information is kept on many different platforms. Thus, we can boldly say that the whole system is digitized.
Digitization of the field is not a big surprise nowadays, since all the industries or fields are influenced by this. However, a more important technology that has changed the stock market is High-Frequency Trading (HFT). The increased speed on the computer has enabled the transactions to be completed in a very short period of time.
The main impact of technological innovations is that now, more and more people are involved in the trading process daily. According to the Axiory Forex broker, there are many specific field innovations that influence the stock market trading in a good way, meaning the simplification of the process itself and saving our money and energy. Some of them, such as technical indicators MT4 offers its users, help traders make decisions as analytically as possible, which means that these indicators can be used to analyze the behavior of objects to trade. This way, you can save time searching for dates and make your own schedules.
What is Distributed Ledger Technology?
DLT is a tool or instrument that records the ownership of many different parts of the financial market, such as assets, property or etc. To change the ownership of any of them, central banks use the centralized system. The transactions are kept in the local database.
Different from this, the Distributed Ledger Technology is a database, which keeps track of the transactions in scattered networks, not mobilized in only one central location. All the members are able to see and modify the records, once they have access or permission to that.
The most well-known DLT is blockchain which is operated by special algorithms. Due to this technology, it is difficult to make transactions fraud because the algorithm keeps the data secured.
Finally, to sum up, we are already unable to imagine our everyday life without the convenience which is caused by technological innovations. Now, imagine the stock market, which involves millions of analytical data, charts, and numbers everywhere. And now, imagine how big an impact and influence the technologies have on the stock market, that the traders are no longer the ones who work on creating and analyzing the information, but the computer and its own systems and platforms.
This is why we see so many people becoming interested in the stock market daily as it has become more convenient, profitable, and time saver. The article does not state that you do not have to do anything when you become involved in the stock market, vice versa, you need more specific knowledge of the system, but it definitely is a time and energy saver for the traders.