Big Data Has Major Impact on Online Trading

How is the big data revolution changing the face of online trading platforms? In the 2020s, even small brokerage firms can leverage the power of massive databases for the benefit of their customers and themselves. But on the retail end of the spectrum, how has access to vast amounts of information transformed the way individuals place, monitor, and exit trading positions? Those questions are at the heart of the modern metamorphosis of the online trading industry.

The best way to understand the situation is to look at the anatomy of a typical trade in the era of big data. People of all experience levels can benefit from having facts and figures at their disposal. In many ways, the current state of the brokerage platforms is a win-win for consumers and firms. Consider the following facts about big data's substantial impact on the way online trading platforms operate and how users benefit from the new way of doing things.

Fast & Frequent Trades

Detailed information in the form of big data lets traders and firms execute quickly. Gone are the days when new users had to spend lengthy sessions analyzing historical prices, company facts, and recent corporate events just to enter a single position. Today's big data environment gives firms the ability to offer their customers sophisticated bots, software, and other tools to leverage the power of vast quantities of information in a split second. It's fair to say that the average brokerage customer is more comfortable taking part in frequent buying and selling than in days past. The sheer volume of relevant data and analysis at a person's fingertips makes it possible to engage in what brokers call HFT, or high-frequency trading.

 Less Room for Human Error

Simulator apps and demo accounts can help even a rank beginner learn how to trade before putting any of their own money on the line. But big data offers another unique advantage to people of every skill level: fewer errors. When calculations are almost fully automated and can manipulate large quantities of information as they wish, mistakes are less common. The term human error reveals much, even though computer programs and codes are not infallible.

However, machines do one thing exceptionally well. They follow human instructions to the letter. That means that a tested application will continue to perform as expected unless the programmer introduces uncertainty into the mix. Financial markets generate unimaginably large quantities of data every day. Trading firms, and their high-tech platforms, can use that information to make more informed decisions and gain helpful insights into the markets.

User-Friendly Platforms for Everyone

Technical and fundamental analysis benefits from big data. On the technical side, the advantage is obvious: more input delivers refined and potentially accurate estimates of future price behavior. But the big data revolution is also having a profound impact on fundamental studies as well. The term data, in most people's minds, tends to conjure up numerical information, equations, raw figures, and other quantitative information.

But many trading platforms have the power to utilize qualitative facts about a company's history, management team, recent news, pending legal cases, etc. Fundamental analysis is the preferred avenue for many experienced traders who find insights in more than numbers and quantitative equations. Depending on the platform and brokerage firm, fundamental analysis can play as important a role as technical analysis does when choosing a stock or other security for short-term or long-term investment purposes.

 Levels the Playing Field

A decade ago, before retail traders had access to endless reams of info, stats, and historical prices, well-heeled institutional firms had a distinct advantage. While corporate entities still wield more power, retail trading enthusiasts are better equipped than ever before. The combination of digital markets and big data work together to level the field for all players.

Shopping for Ethical Providers

Knowledge is power, so anything that gives people more information is a positive development. But individuals should be aware of merchants that claim to offer access to gigantic databases for a fee. Top brokerage firms don't charge their clients extra to use secret files or proprietary data caches. However, there are a few purveyors who engage in unethical marketing practices along those lines. Be aware that they exist and avoid them.

Being an Informed Consumer

The field of data and information is constantly changing. Traders should stay current by reading news articles that describe the latest developments in fields like AI (artificial intelligence), big data, database management, bot-driven buying and selling, and similar topics. Reliable brokerage firms will include updates and relevant news stories in their educational sections, blogs, and news feeds.