Trading at capital markets an early age is an important endeavour, as it gradually brings in financial discipline and with enough savings, one is prepared for the future uncertainties. While the young generation had previously steered clear of stock markets investments, with growing influx of digitisation in the domain, more millennial and Gen Z investors are taking a deep dive in the world of stock markets trading.
The world at large is witnessing the next technological revolution, led by digitisation. Financial instruments that were previously traded when stockbrokers and investors met at trading floors and executed transactions are now undergoing a digital shift. While stockbrokers previously monopolised the market and their insights and recommendations were the only source of information for investors, there has been a crucial paradigm shift since the dot-com revolution. Owing to the advent of online platforms, information became affordable and accessible to everyone Consequently, trading became increasingly accessible via digital mediums. The same paradigm shift is now getting further solidified, owing to the growing number of mobile apps targeted at stock markets trading. Together, the online platforms and mobile apps for trading have ushered traders in a world of ready access to rich information and enabling quick decision making.
To the same end, here’s deciphering the role of digitisation in maximising gains on trading.
For long, people were hesitant to venture into stock market investments, for the lack of knowledge. The conventional approach would have them chase stockbrokers for buying or selling shares. The endeavour would also warrant hefty brokerage fees and other hidden costs. However, with online trading and developments like e-KYC aided by digital initiatives by the government and regulators, users no longer have to wait in line to start trading. Brokers can be now be contacted with mobile apps to facilitate their trading and investments. Furthermore, since now there is a lack of tedious paperwork and maintenance costs, several brokerage firms are also giving the benefits of digitisation back to the consumers by launching ZERO fee trades or charging a nominal flat fee on others.
Information is key in trading and the same is enabled by a revolution led by digitisation in stock markets trading. Helping investors best navigate an extremely volatile field, online trading available on mobile apps helps with real-time access to key information. Instead of being glued to one’s TV set or religiously skimming through business newspapers and magazines, people now have the freedom of mobility, owing to the real-time notifications and updates offered by online trading apps and platforms. Trading via digital mediums allows users to keep track of share prices anytime, anywhere, real-time. This helps to take the right investment decisions since every minute or better say seconds are extremely important in the stock market.
The speed, convenience and simplicity brought by the electronic trading platforms coupled with transparent and efficient trading policies, opens the markets to a whole new segment of investors. Electronic trading has revolutionized trading in different stock markets across the world as it has enabled individuals to directly trade in different markets across the world. One of the biggest advantages of electronic trading is the consolidation of global stock markets. Electronic trading has created linkages that combine different sources of liquidity from across the world which contribute to consolidation.
With digitisation gradually providing a makeover, capital markets have started exploring more opportunities led by Artificial Intelligence (AI). Stock markets trading taking a digital makeover opens up plethora of opportunities for AI-led automation. With crucial data readily available, AI and its subsets like machine learning and natural language processing can be used to study historical patterns, current trends, and news and regular updates to predict, which stocks would perform better. The information is readily made available to digital-savvy traders for enabling quick decision-making. Furthermore, they can have their queries addressed by robo-advisors in real-time, instead of having to hold the line or perpetually chase brokers.
In essence, one of the most important benefits of online trading is that of ushering in greater transparency in the industry. The information is no longer limited to a handful of people but instead, is shared with everyone. Besides, traders can also track order flow, discover prices and liquidity information. As the information regarding a particular stock or a company is readily available, traders can make much-informed decisions. Furthermore, greater transparency helps resolve their apprehensions, thus helping them systematically build wealth via trading in stocks.
The author is the Chief Operation Officer, Angel Broking