How Info Tech Has Changed Trading

 

How do investors get their information? We review the changing landscape since the tech boom in the 1990’s and take a look at the possibilities for artificial intelligence as mobile apps become yesterday’s news.

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For over a hundred years, the newspaper was the go-to medium for stock information. The markets moved slowly, as reaction times were limited by the printing press and the time it took to call your stockbroker. While the Wall Street Journal had 1.7 Million subscribers in 1990, the digital revolution extended the newspaper’s reach to many more.broadsheet.jpeg

The internet drastically sped up the velocity of financial markets in the 1990s, with the invention of financial news sites like Yahoo! Finance and CNN Money. Suddenly, investors could view articles pulled from thousands of sources all in one place. This allowed investors to make quick, informed decisions based on a huge database of information.  In 2016, Yahoo! Finance generates about 20 million unique monthly visitors, eclipsing the subscriber base of print newspapers during their peak popularity.

Beginning in the mid 2000s, curated news was not enough for savvy investors, who wanted to skip the raw data and seek the wisdom of the crowd through more quantitative insights. This gave rise to crowdsourced sites like Seeking Alpha and StockTwits, which gave unbiased insights into the collective predictions of the investing community, earning the term “social investing” before mainstream social networks were born. Today, these sites cater to a niche market of active traders, and the top 10 crowdsourced investing sites generate approximately 5 million visitors a month.

As mobile smartphones took over the consumer market, the “App” was born, allowing users to access these social and news products from anywhere, and freeing many day traders from their desks. At the same time, mobile trading became increasingly popular, now making up around 20% of all retail investor trades. Today there are hundreds of apps offering investment advice, boasting a combined active user base around 100 million.

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StockTwits, a popular social investing app.

In 2016, we look ahead to many promising post-app technologies, as messaging becomes an operating platform of its own with third party integrations, and bots allow users to instantly satisfy their needs with the help of artificial intelligence. Banks and brokerages have shown strong interest in Facebook messenger and Amazon Echo, as they continue to engage with their customers’ daily lives.

It’s an exciting time for the future of financial information, as your financial advisor could be just an instant message, or a voice command away at all times. Notably, while the user-facing technology is changing, the core features of investment information are not. Users demand instant access to earnings ratios, analyst opinions, and other intel on the trajectories of their investments. To make this information actionable, publishers can allow users to dig into their holdings and trade from anywhere.

Once the hype dies down over artificial intelligence, we can expect something even more innovative to take its place as the easiest, most efficient way for retail investors to research and transact. When this happens, trading technologies will be ready to penetrate the new medium for information exchange, as the retail investing market opportunity expands even further.

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