How machines plan to conquer the
stock market?
By Siddhant Bhagat, FE EXTC
“Billions of dollars might have changed hands at this very moment, in a world not physically
perceived, practically invisible, but certainly having a valuable existence.”
So here we start our journey, to unravel the enigma reflected in the above lines.
Trading stocks has seen a massive methodical and technological change since the early
90s. The air of a stock exchange room is no longer filled with a raucous din. There was a time,
not very long ago, when piercing noises resonating in the trade room signaled the movements in
stock prices; but that is a thing of the past. Today, it comprises of high-performance machines
executing multi layered tasks, which are fascinating to look at, but disturbing to think of.
Research
Investors have unprecedented access to information about companies and their stocks: the
current stock prices, company earnings reports, and breaking news about stocks and the
companies issuing those stocks; all thanks to the Internet. Performance of stocks can be
analyzed in real-time, and the results can relay to an enormous number of people in a jiffy.
Machine learning techniques and predictive analysis simulations enable experts to scrutinize
numerous data points simultaneously. The sole consequence of this is: more informed
investors, traders and advisors.
Execution of Trades
Computer systems record buy and sell orders so quickly that investors can know their price and
other details within seconds. In addition, because electronic trading eliminates handling of
transactions by people, errors have become infrequent. Though the long-established standard
of three days remains in effect for verification that money has changed hands and the shares