Question

What are some major pros and cons that financial markets face with technology? Need as descriptive as possible please!

Answer 1

To analyse the pros and cons of the influence of technology on the stock market, we must first understand the influence of technology on the stock market. It can be said that today, there is almost no aspect of our life that has is not technology-driven. It has taken over many aspects of our otherwise ordinary lives. It has also brought about changes in how we produce, how we sell and how we consume, be it a product or any service. Thus, it is only natural that the stock market today is also run differently. Some of the obvious pros of this impact are;

1.Ease of use

Before, only people with in-depth knowledge, such as the brokers of the stock market could get into trading. Now due to investors education and awareness, and availability of Apps such as Groww, RobinHood, trading has been made easier for everyone.

2.Availability of information

Before only brokers and a few other people with access to high-value information would trade in the stock market. Lack of information made it difficult for people to get into trading. But now, the information needed is just a click away. And almost anyone can learn about the stock market or about the various stocks. Also, the information that is now available, is more in-depth.

3.Speed of transactions

The speed of transactions now is faster than ever. Believe it or not, traditionally, the trades were done by shouting from one end of the room to the other on what was called the trading floor, then it progressed to trading on the telephones and finally the internet.

Now, for some of the cons of trading in the stock market today:

1.Technology Glitches

Programs used by big investors (mutual funds, hedge funds and pension funds) have a specific date and time to make the trade. Since the volume of transaction is also very high, the other investors can be fooled by it. Some other times, a glitch in technology may result in overbuying or selling. This situation may lead the market investors to panic and just follow suit like the others.

2. Volatility

Since a huge amount of information is generated and fed into the systems every minute, the stock market changes also every second. Along with valid information, much false information may also be generated. Since many people may act on it, it may lead to the Stock market being very volatile. However, this was not the case before.

These are the major pros and cons that financial markets face with technology