How Information Technology Has Affected the Stock Exchange
Information technology improves stock exchange efficiency. Advances in technology have worked to place professional traders and retail savers upon more equal footing. Still, distinct risks have emerged related to new technologies.
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Benefits
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The reliability of information improves confidence and trust within the stock market. This confidence generates increased demand for stocks, and higher profit margins for the independent exchanges.
Identification
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Information technology relates to the dissemination of data. Stock exchange data is concerned with price quotes, news and transaction confirmations.
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Features
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The stock ticker is the most vital conduit for stock exchange information. Stock tickers present information related to individual trades, share prices, and volume. Digital feeds transport stock ticker information from the trading floor throughout a global network of terminals. The information is in real time, allowing for thoughtful decision-making.
Considerations
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Improved technology enables stocks to now be quoted in decimals and pennies, rather than eighths or .125 cents. This distinction narrows the bid-ask spread, which increases your chances of buying and selling stocks quickly at a profit. Stocks trade by auctions, where buyers and sellers meet between the bid and asking prices.
Risks
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Information technology increases volatility in some cases. Program trades that rely upon computer algorithms might incite panic when market data triggers large sell orders.
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