Today’s data and trading tools have transformed how individual traders invest in markets. Traders are constantly looking for new ways to leverage different strategies to optimize portfolio positions, and to do so, they must efficiently navigate the data landscape and refine their ideas. Markets move fast, and so do data and the tools used to analyze data.
Today, traders need access not only to data, but also to the right tools and research, and communities where they can share ideas and solicit feedback—the risk of not being prepared results in lackluster portfolio performance.
Technology has changed how traders access market data. In the 1960s, stock prices were transmitted over telegraph lines. Today, some traders are looking at changes in prices that occur over a millisecond or nanosecond. How traders access and analyze data evolved rapidly with the introduction of computers and the Internet, which quickly gave more people both access to markets and the data behind those markets.
How people traded also evolved. Electronic trading platforms were first used in the early 1990s. With improvements in latency and lower costs for computers came widespread adoption. Electronic platforms made data available to traders and the general public—these platforms enabled the development of new financial instruments like ETFs and new ways to analyze market data.
Even so, markets have changed in a way that traditional trading strategies don’t perform consistently. While holding both fixed income and equities is important for a balanced portfolio, determining the right percentage of each requires access to data, tools, and research, as well as a community to discuss different strategies.
That means that traders need fundamental information more than ever as strategies change to address changing market conditions. Data that was once available to a few traders at a very high cost is now readily available to anyone with a computer and Internet connection. Also, there’s a universe of affordable platforms that help retail and smaller investors analyze data, conduct research, and execute different portfolio strategies.
Along with data, technical analysis has experienced a similar evolution in scale and affordability. Much of this analysis requires fundamental macro data as inputs, and the models provide a broad market analysis. Traders are looking for reliable technical analysis and technical aggregation of data so that they can create repeatable processes based on a mathematical view of the market.
Understanding market dynamics is an integral part of refining a portfolio strategy. Different types of traders have different data and analysis needs. Technical traders focus on the short-term and conduct analysis that’s independent of macro events. Swing traders and long-term traders monitor macro trends as they consider which positions to hold and how different political or economic events can affect a position.
This dynamic of continued evolution creates an apex of opportunity. There’s untapped potential in how to match data with available tools to ascertain the best analysis. Marrying both macro and technical analysis is the sweet spot that traders are looking for, and they need to be able to access different tools as they develop different portfolio strategies.
Portfolio performance can vary, particularly in volatile markets—a real-world stress test. Data, technology, and research are costs to investing that ultimately lower yields, but as these become more accessible and cheaper, these lower costs create a deflationary effect. Everything that relies on technology becomes cheaper. Information asymmetry has changed; today, everyone has access whereas previously, access to data was limited and costly.
The final piece that’s important to investing is a virtual trading floor, or community. Communities help traders flourish as that’s where traders can validate ideas and solicit feedback at no cost. While physical trading floors don’t exist in the same form, this online environment provides a platform for the conversations and exchanges that used to occur on the physical floor.
The financial industry is pushed to continuously develop increasingly complex data and trading tools as markets evolve and the needs of traders at every level become more sophisticated. The financial world is at an inflection point where macro and technical analysis combine with growing virtual communities.
As the data landscape changes, it’s important to use the right trading platform that combines data, research and communities in one place to enable the abilities and opportunities of real-time trading. This search helps fuel market evolution.
