The internet has dramatically revolutionised a number of fields, not least of all that of the financial markets. From robo-advisors to bitcoin to online banking to big data and analytics, the possibilities are endless thanks to the advent of new technologies such as AI, automation and the IoT. Simply consider that 10 years ago we were walking into a bank to deposit money while today we can wire a sum of money to an international account with the press of a button.
‘Fintech’ or financial technologies is the most rapidly growing field of technology in the world today, and encompasses the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services.The world of finance, including investment, has been completely and unarguably upended by fintech. And the trading of stocks and shares is no different.
Many still associate share trading with in-person transactions on the floor of the New York Stock Exchange (NYSE), with all the hustle, bustle and excitement that it entails. But unfortunately for those who prefer a taste of the dramatic, share trading can now be as simple and as inhumane and un-interactive as the tapping of a button on a personal phone.
While the NYSE still ensures that kind of visual is maintained in the eye of the stockholder, most trading today takes place privately, over computer systems owned by individuals. The trades are transacted via underground fibre-optic networks that carry messages between computer systems at banks and trading firms, into data centres that host a particular exchange’s trading engine. Apps and platforms are, it seems, the new NYSE, and there are several which are proving popular among modern traders.
Why is this, you wonder? Simply because there are typically lower costs associated with online traders, as trade commissions tend to be larger when it comes to in-person investing. For example, if you seek the help of an actual stockbroker, you can expect to pay roughly $30.99 per trade in commission. To make the same investment online, you might spend an average of $8.90. Online brokers are, in general, cheaper, mostly because they don’t have the cover the same overheads as stockbrokers who work in the more physical sense.
When it comes to finding a broker online, E-Trade is perhaps one of the best known online brokerage providers, with three different trade platforms available for users in addition to its market data, quotes, data analysis and other useful information and resources. Best of all., E-Trade offers plenty of commission-free funds. There are also broker platforms Fidelity, TD Ameritrade and Vanguard, which has an average expense ratio of just 0.10%. Interactive Brokers is another that is recognised for its low cost but comprehensive service platform.
Next, there are platforms dedicated entirely to stock market research. From Tradespoon (which offers a 7 day free trial) to StockFetcher.com, Yewno|Edge, TradingView and The Motley Fool Stock Advisor, there is no shortage of online tools and resources for analysing the stock market; assessing a company’s annual report performance, for example, and its annual return on investment (ROI). It’s now possible to access a wide range of stock market analysis tools online, such as stock screeners – which scan the entire market to give you information on average trading volume, price, chart patterns and so forth – charting software, and stock simulators.
Now onto the platforms and websites that actually allow individuals to sidestep the broker and directly buy shares themselves. Apps like Robinhood Trading have made it easier than ever to access stock market trading, making it accessible to new types of traders with lower amounts of wealth than previous traders. That being said, RobinHood Trading doesn’t give traders access to a full range of investments like mutual funds, but it certainly works great for stocks and ETFs, and it recently added support for Bitcoin and other cryptocurrencies.
Acorns, however, is the app that is best for complete beginners with no idea how to go about the trading of shares. It describes itself as a site for ‘investing your spare change’, implying that there is no such thing as too small a trade. It’s so easy that once your bank account is linked, Acorns will track your regular spending and “round up” purchases to the nearest dollar, which is then used to make small investments via Acorns. It also automatically builds users a portfolio of stock and bond investments based on a brief questionnaire, helping build users a diverse, broad portfolio in line with their investment goals.
Between the countless apps, websites and downloadable digital tools that help traders invest in shares with more efficiency than ever before possible, it’s no wonder that a growing percentage of the approximate $US5,100,000,000,000 traded daily is traded online.