When I was in high school in the Dominican Republic, I know what I wanted to do, I wanted to become a Wall Street trader, like the ones in the movie Boiler Room. I did somehow ended in a Hedge Fund, albeit without becoming a millionaire like the guys did in Boiler Room. When I started working at Wall Street as a recent grad, I noted that things where really different from what I thought it would be. I worked at a fund which was an old school fund, meaning that it invested because based on the fundamentals, or the underlying business dynamics is was a good investment. Soon I realized that technology was changing Wall Street face.
Something that catched my eye while working at the hedge fund, was that the office right around the corner had a lot of computers and few employees. I soon realized that this was a High Frequency Trading Fund (HFT), which according to Investopedia, “High-frequency trading (HFT) is a program trading platform that uses powerful computers to transact a large number of orders at very fast speeds. It uses complex algorithms to analyze multiple markets and execute orders based on market conditions. Typically, the traders with the fastest execution speeds are more profitable than traders with slower execution speeds.”
Soon I realized, that I was at the advent, even perhaps at an inflexion point, where technology and social media will dominate wall street and the trading landscape. Indeed, I do believe that technology in wall street will ultimately dominate jobs and I believe this already is happening. UBS had once the largest trading floor in Stamford, Connecticut. Today, this floor barely houses a couple of employees, which most probable will be relocated to another office.
So what has happened in the trading world, well, those who haven’t turned to alternative investments such as cryptocurrencies, have more recently to passive investing, instead of investing in mutual funds, people are now investing in other assets, which is easier to understand for the simple investor.
Now more than ever, technology and social media are controlling how we invest. Before we would provide our excess capital to Wall Street, now Wall Street is at our fingertips. Now social media has dominated how we invest. Platforms that help us achieve this are platforms such as etoro. Etoro is a social media platform which how they describe, “Social trading is the utilization of user-generated content, and crowd-wisdom, for the act of online trading. Social trading sites provide their users with a variety of community-based tools in order to give them the information needed for making smarter investment and trading decisions. For example, a social trading platform would enable its users to see other users’ portfolios, read their news feeds, and look at their overall performance, to gain a better understanding of trading strategy.” Through this platform, common investors like you and me have the opportunity to copy others people investment strategies and invest on our own.
Another platform that dominates the social media investing platforms is StockTwits. According to the company, “StockTwits streams consist of ideas, links, charts and other important financial data, summarized within 140 character messages. Users, which include analysts, media and investors of all types, as well as the public companies themselves, contribute to the stream. Investors, and others interested in stocks and markets, can easily follow individual stocks, specific contributors, as well as view the StockTwits stream across dozens of financial sites that integrate the stream including Yahoo! Finance, CNNMoney, Reuters, TheStreet.com, Bing.com and The Globe and Mail.” StockTwits is an amazing tool because it harnesses the power and technology of twitter with the knowledge of investors. This is an excellent tool for anyone out there who is looking for insightful information to invest. Most importantly, this platform provides information which would otherwise cost thousands of dollars all provided free.
Now the most recent move in investing, which is sure to affect wall street traders as we know it, are trading Apps. These trading apps take out the guesswork for investors and provide an easy to use GUI and navigation to make the most of your trading. Some of these apps such as Acorns, take your spare change and invest the money how ever you decide your risk tolerance is, to more flexible apps such as Robin Hood which make trading “free” for those who have less money
We are at the crossroads of changing dynamics in the investing world and the future will be social. Only time will tell which platform will succeed among the many offerings.