Data, Bots and Trading Techniques: How the Financial Markets Have Evolved

Big data and robotic process automation (RPA) might be relatively new concepts to people in the mainstream, but they've been integral to traders for over a decade. Financial types have long since understood the value of information and, as our collective capacity for collecting data has increased, so too has the number of tools at a trader's disposal.

Big Data and Bots Come to the Fore

We have to go back more than a decade to see the start of automatic trading aka algo trading. As noted by The Business Professor, algorithmic trading was first introduced in the 1970s. With computers capable of processing more data than before, programmers were able to create products that could make trades based on mathematical models.
This initial synergy between computers and humans has since been taken to extraordinary levels. Today, more than 10% of all trades are performed by computers. In the US and Europe, algorithmic trading accounted for 80% of the trading activity at 10% of hedge funds, according to The Trade. All of this means the trading market is worth billions. In fact, by 2024, data from MarketsandMarkets Analysis suggests the algorithmic trading market will be worth $18.8 billion.

The Rise of Algo Trading

Put simply, automatic trading is big business. However, it's not the only way people trade. As advanced as robotic traders are, they're not suitable in all contexts. The good news, however, is that big data isn't only available to computers. Anyone can go online today and access a wealth of data. For example, if you want live data from the DXY (US Dollar Index), you can get it. Not only do online data hubs provide live price charts, but they can also give you historical data, breaking news and expert analytics.

And, just to add more data to the mix, you can subscribe to "snapshot" reports, which offer Twitter-style updates on anything related to the US Dollar. As you'd expect, the plethora of information isn't focused exclusively on the US Dollar Index. You can get statistics, reports and analytics for anything within the financial world. If you want live S&P 500 prices, you've got it. If you want news updates from Wall Street, just go to an outlet such as CNBC or use social media.

If you want an analysis of price data, download a program such as MetaTrader 4 and use one of the many charting tools. Put simply, the age of digital data has opened up the financial sector. Regardless of whether you're a bot or a person, more information is out there than ever. Of course, this doesn't mean trading is any easier or the results are more certain. Financial markets are unpredictable. Therefore, no trade is guaranteed to be successful, no matter how much data you consume.

However, the point here is that information is abundant. That makes trading more accessible to the masses. This is down to two things: the proliferation of data and the rise of bots. As algorithmic trading programs became more advanced, the need for more digital data increased. This led to a surge of innovations which have brought us to a point where big data and RPA are an integral part of the trading world. In turn, this has made the financial markets more accessible to the average person than ever before.