It’s said that change is inevitable. This saying applies very aptly to stock markets. In the last century, stock markets have revolutionized at a tremendous pace. Gone are the days when traders gathered at exchange floors and yelled their orders. Almost 99 percent of the traders use electronic trading platforms now. Veterans would agree that they might never have imagined this to happen. From expensive full-service brokers to discount brokers, from manual ordering to algorithmic trading, from tape readers to robust charting platforms; a lot of things have changed today. What else is going to change in the next 20 years? Well, I have listed our top 5 predictions.
Artificial intelligence and machine learning are going to be an integral part of next-generation trading. Intelligent machines would replace any kind of manual intervention. It will overcome the risks of emotional trading. These machines would learn from every trade they execute and dynamically change their decision-making abilities. They would be trained to act on all market conditions. Traders would not compete against each other, rather these machines would!
More Derivative Products
In almost every stock exchange across the world, the majority of trading happens on derivative segment like futures and options. These products offer more flexibility compared to the underlying securities. We should witness an addition to the number of derivative products in the coming generation. How about real estate derivatives or second order derivatives? There may also be derivatives expiring weekly or categorization of these products based on risk.
With the advent of the algorithmic trading system, we have seen a lot of automation in trading from the last decade. This trend will continue at a faster pace. Tele-callers at your broker contact center may be replaced by intelligent robots. Your trading terminal may start understanding voice and gesture commands. People would start selling automated trading systems and the traditional advisory services would lose its sheen. Big hedge funds would start employing trading bots instead of humans. This list is endless and is all up to your imagination.
Change in Trading Hours
This is going to happen a lot sooner than others. The current 6 hour trading time is not adequate for full-time traders. As the trading becomes more automated in the coming generation, there is a high possibility that exchanges would start allowing 24/7 trading, especially in the derivative segment. The same happens in the forex market today. This would increase the trading volumes, which will benefit both brokers and exchanges.
Trading as an Education and Career Option
We are more convinced about this happening than any other points mentioned in this article. Trading has been considered equivalent to gambling from years, but this notion is changing now. There is a lot of science and mathematics involved in trading if you dig deeper into the subject. As the scope and popularity of trading increases, educational institutes will start offering master’s and bachelor’s program on trading. There will be professional courses on algorithmic system development and mechanical trading. Also, hedge funds and other financial institutions will start offering jobs to the candidates enrolled in these courses. It’s definitely going to be a white collar profession in the coming years.