3 Ways That Technology Can Improve Your Investment Strategy
In recent years, as market dynamics, consumer behaviour and trading regulations have changed and become more complex, there have been calls for the investment market to adapt and become more tech-driven. Investing has always been a somewhat traditional affair, making it an intimidating activity for some, however, this has shifted with the introduction of new technologies.
Digital transformation isn’t new amongst enterprises, however, the reality is that this isn’t something that happens overnight. With the advancement of technology, this transformation has been driven by the acceleration in areas including artificial intelligence (AI), machine learning and big data, all of which are helping to make financial markets more efficient and more easily accessible than before.
Technology has revolutionised the way in which investments work. Technological advancements within the investment industry have made the act of trading more accessible to general investors, but these advancements have also helped improve investment strategies. Let’s take a look at the effects of technology on the investment landscape, along with 3 ways that technology can improve your investment strategy.
The Effect Of Technology On The Investment Landscape
Technology being used to enhance financial markets is not a new innovation. Tech-driven and automated trading systems have been in use since the 70s, with the internet allowing investors and traders to access real-time market information and data since the 90s. With the recent surge in the availability of information and data which can be accessed, alongside the development of new and sophisticated algorithms and technologies, investors can now make much more informed trading decisions in a fraction of the time.
One of the biggest benefits of this advancement in technology is the ability for traders to identify new and potential investments, being able to make their decisions on data-driven information. Trading systems that use algorithms can analyse huge amounts of data in just a few seconds, which allows investors to respond quickly in order to take full advantage of any short-term opportunities presented to them. These systems are also able to generate trading signals which can then be used to enter and exit trades with more precision and accuracy.
1. Mobile Applications and Platforms
Mobile apps and platforms have made trading and investments easier and more accessible. Frequently updated information and data on the trading markets are now available in just a few clicks through specific apps and can be accessed by investors from anywhere in the world. This has made investments such as NFTs and cryptocurrency more accessible and has removed previous barriers that were in place for traders to enter the industry. As a standard feature, most smartphones now include built-in stock programmes and apps which allow those invested in trading the opportunity to view worldwide visual charts and notifications at their convenience.
Another progression seen as a result of the improvement of technology within trading is that of robo-advisors. Robo-advisors use a digital platform which offers automated financial and investment planning using algorithms. Typically, robo-advisor platforms will ask questions about your financial situation and investing goals using an online survey.
With the data provided, it will then offer trading advice, or can automatically invest for you. Robo-advisor platforms differ from trading apps in that they operate on an automated basis, whereas trading apps require active investments, where you need to make the decisions and physically make the investment required. Robo-advisors are ‘passive’ investment platforms and will trade for you. There are sites, such as Wiseabout.money, that allow you to compare the best robo-advisor platforms available, as well as explain more about the operating systems used for each one.
2. A More Accessible Market
Technology has helped to improve the accessibility of financial services and trading markets, meaning that traders and investors of all experience levels can get involved. The expansion of technology has led to the subsequent increase in the number of trading platforms available, which makes it easy for investors to sell and buy bonds and stocks.
With robo-advisors, they can provide personalised investment advice, as well as the management of trading portfolios. The expansion of these tools has allowed individuals interested in trading and investing to take control of their investments, whilst building their portfolios that have been tailored to their individual needs. This digital transformation has led to the creation of a new era of investing, creating one which is much more efficient and accessible than before. There has also been the development of new forms of investments, including digital assets and cryptocurrencies, that have provided investors with new opportunities to diversify their trading portfolios.
3. Improved Security
With investors making the majority of, if not all, their investments online, technology has helped to make these investments more secure. Encryption has become more advanced and there are now a number of different tools used to ensure the protection of traders. Digital trading wallets contain vast amounts of confidential information about both your identity and personal finances, but the advancement of technology has helped decentralise some of these trading wallets and ensure anonymity.
This improved security has helped reduce the probability of wallet hacking and security breaches, further mitigating the risk of financial losses. Compared to traditional investing and trading methods, technological advancements have enhanced the security of transactions, as well as reduce the likelihood of hacks and security breaches. Digital wallets and mobile apps and platforms now also create backups of data, further improving security measures and allowing traders to recover their accounts quickly in the event of restricted access.
Whilst investments require financial risks in their entirety, technology advancements have helped to reduce the mitigation of risks involved. Technology has opened up the possibility of new opportunities for investors, as well as the function to trade anywhere across the globe. In their nature, trading and investments require the sharing of confidential information, such as bank account details, personal information and essential information.
Technological advances have also seen an improvement in data security with the rise in sophisticated encryption and improved security measures. Technology is constantly revolutionising trading and investments, helping investors to make more informed decisions, whilst ensuring that their data is protected.