Stock Market's Generalities
January 29, 2018 at 2:10 pm #1575
The stock market is a complex environment where buyers and sellers actively exchange shares in a company. Its volatility depends on factors ranging from economic news to internal developments within the company.
There are many reasons why traders approach the stock market. Depending on the time horizon, traders are:
– Speculators – they look to buy and hold shares for a short period with the purpose of making a profit from their movement. Typically, these are technical traders.
– Swing traders – this type of traders have a longer time horizon in mind. They keep a company’s shares until the dividend date (if any) and base their decisions both on technical and fundamental analysis
– Investors – these traders typically look at major news and essential data to justify their decision to invest in a company. Changes in the macroeconomic picture and shifts in the overall monetary policies around the globe influence their analysis.
The Stock Market in the 21st Century
These days the stock market differs from how it was a hundred years ago. It is only reasonable, as it changed together with the world.
Personal computers forever changed the way we look at markets. New technologies became available for the trading industry, with execution improving at a fantastic pace.
At its early stages, there were no stock market indexes. Now, every part of the world, region or country has a stock index that tracks the movement of significant companies in the economy.
In the United Kingdom, the FTSE (Financial Times Stock Exchange Index or Footsie) tracks the movement of one hundred companies listed on the London Stock Exchange. In other parts of the world, there’s an index that does the same; only it may refer to a different number of companies. Here are a couple of examples:
– DJIA (Dow Jones Industrial Average) – it tracks the movements of thirty corporations in the United States
– CAC – benchmark index for the French market, following the progress of the most prominent forty companies listed on the Euronext Paris
With new times came new products. Sometimes the market moves too slow or too fast for investors appetite. As such, products like ETF (Exchange Traded Funds) come to complete the need for alternative investments.
Such a fund tracks the evolution of an index. However, depending on its definition and setup, it may follow only some stocks in an index or just part of the general market.
Virtually, today there’s an ETF for anything you can imagine in the worldwide financial market. Want to trade the shares of gold producing companies worldwide? There’s an ETF for that. Want to speculate on the financial stocks in Asia? There’s an ETF for that too.
Execution in the stock market changed dramatically. Before the personal computers’ appearance, investors tracked the evolution of a stock price manually.
Today, sophisticated platforms show various types of charts that traders customize with infinite possibilities. It is only normal, considering that traders follow robots in the 21st-century stock market.
The explanation for that comes from the fact that almost all trades are automatically executed today. Human trading barely exists anymore.
Traders can access the stock market from various sources. Brokerage houses this day don’t focus solely on one market but look at other financial products their clients might be interested in.
Therefore, a traditional Forex broker doesn’t offer only currency pairs to its clients, but also the possibility to trade commodities, stock market indexes, bonds, ETF’s, and various other products. Virtually anything that moves and leaves a “trace” in the form of a chart, and is part of the financial market, may be the subject of speculation.
All in all, the stock market changed and will continue to improve. Artificial Intelligence (AI) is about to change everything, with new breakthrough developments being made public each day.
It won’t be long until robots learn to program trading algorithms, and humans will simple supervise execution.
You must be logged in to reply to this topic.