Before computers played a major role in day trading, stock exchange marketplaces were full of traders and brokers. Trading of stock, currencies and options was done manually. It was common to find the trading floor full of brokers and day traders shouting, pushing and shoving in order to place a deal before the market prices changed.
Thanks to improved computing power, that is not the case today. Instead, stock exchanges have replaced this mode of trading with advanced computer systems that are able to interact with other international marketplaces within nano seconds. No longer do traders have to spend time on the phone placing orders.
So, how has technology changed the way day traders go about their day trading.
Ease of access
Before Sir Tim Burners Lee developed the first HTML webpage culminating the start of the World Wide Web as we know it today, traders had to carry out every single trade manually. Back then, it was difficult to find information about trading. The only way one had to get information is by heading to the library and spend hours reading through financial literature.
If this option was difficult, the other option you had was to contact the brokerage firm and request for their latest financial report. Since email had not been introduced yet, the only way one had to get such a report was through mail. This meant higher charges in form of postage especially if the report was huge.
Thanks to the internet, information is readily available at the touch of a button. Search engines have made it easier to locate information among millions of websites. Furthermore, day traders no longer have to reside close to the stock exchange market.
You can be living in a most remote location and be able to trade with all international market thanks to the internet and online trading systems. This enables one to locate profitable securities and place an order before the market changes. Furthermore, if you are training to be a day trader, you have access to historical data allowing you to learn the ropes.
Advanced order entries
Did you know that due to automation of trading systems, markets are able to execute trades in less than half a millionth of a second? Compared to how trades were carried out before automation and introduction of systems that run on complex algorithms, today traders have it very easy. In day trading, it is common to hear the following words –millisecond executions, no latency and no time delays. Why? Speed is a major factor that influences decision making when it comes to day trading.
During the 90’s, majority of trading was executed via voice. The OTC market was worth $ 1.2 trillion. Today, more than $6 trillion is traded electronically thanks to automated trading systems that rely on the internet and complex algorithms.
As a result, day traders are able to place advanced orders using hotkeys or at the click of a button whether they are trading blue chips or penny stocks.
During the 90s, computers were very expensive and few homes could be able to afford one. To access the internet, you had to do so via a 56 kbps modem that was connected to your home phone.
What happened in most homes is that when someone picked a call, the internet would be inaccessible. Imagine trading in this kind of situation. There would be a moment when you are about to capitalize on a buy order only for someone to call and the internet was terminated. This would definitely result in you losing that trade.
Today, users have access to smart devices (smartphones and tablets) that have combined the following machines into a miniature device – computer, camera, radio, recorder and printer among others. With a smartphone or tablet at hand, you no longer need to spend hours in front of your computer monitoring trades.
You can monitor trades from anywhere around the world thanks to the availability of mobile solutions for trading platforms. How is this helpful? Day traders have freedom and mobility. One can take a short or long vacation to another country and still be able to place trades. All you need is access to the internet.
What you have just read above about the accomplishments experienced in day trading as a result of high speed internet and improved computing power are just a fraction of the wonders to come. Today, day traders have access to social trading networks that allow one to interact with like-minded individuals.
They can be able to gather news about a particular stock and get to profit. Sharing of ideas allows you to learn new strategies finally having the potential of improving trading and earning profits.
Recently, Intel and AMD announced new computer processors for desktops and servers which tells you that innovation will play a major role in the future of day trading. That is why this is a great chance for you to try your hand in day trading and become successful.