Technology can help investors trade faster, manage risks

India has come a long way when it comes to trading. We have moved from an open outcry system where one had to call their broker from landlines, to a totally automated trading system on mobile devices.

There has been a tectonic shift in the way investors have transacted on stock exchanges. Speeding up the systems was just the beginning. Since then India has taken great strides to automate and streamline its exchange trading systems.

Technological upgradation, artificial intelligence and machine learning tools have had a great impact on the way retail investors trade on the exchanges today. It enables an easier way out from the number crunching, by scanning through thousands of stocks, all in real time.

Mobile app trading

Mobile apps are a boon for investors, as they provide information as soon as it is created anywhere in the Google or for that matter received by the exchanges. For example, when news of the PNB scam broke out, mobile apps conveyed this information instantly to investors who could take timely action in order to safeguard themselves from any fall in the market.

Additionally, mobile apps provide comprehensive news about all stocks on one platform. Thus, investors don't have to venture to different websites, but can get all the stock related information compiled in one place by using smart app technologies. This becomes easier for investors to trade and invest by looking at price charts directly.

More choice of products

Availability of various financial products in Indian capital markets have provided retail investors with more choice and ease of investment in a gamut of asset classes, from the luxury of their homes. Be it equities, derivatives, commodities or currencies, all tradeable securities can be assessed by retail investors through mobile apps or desktops.

Trading and investing in different segments to maintain portfolio diversification has become extremely easy. Buying silver, selling USD/INR, going long on a futures position - anything is possible for a retail investor without having to undergo the vigorous paperwork. Application to Initial Public Offerings and allotments of the issue have also become extremely convenient due to the technological advancement.

Trading across international markets

With the advent of advanced technology and constant upgradation, trading across international markets has become easier and accessible. Due to the availability of trading platforms on cell-phones, investors can use price parity to their advantage and take arbitrage opportunities in international markets and hedging strategies. The use of leverage is attracting retail investors who are making use of the advanced technology to place highly risky bets. In fact, investors may also be taking derivative bets, as they can closely monitor their leveraged bets. From 2011 to 2017, there has been huge increase in the trading in the derivatives segment.

Investment summary in one view

With an investor's corpus distributed between mutual funds, equities, debt instruments, money market schemes, it becomes difficult to track the overall risk and returns. But with AI and technology, there have been portals which provide the entire investment summary of an investor in one view. This reduces the hassle of going to individual websites and helps in efficient investment management by keeping in mind the risks and rewards of various plans, schemes and funds.

TOOLS OF THE TRADE

• Mobile apps provide real-time information and help investors invest in variety of products like derivatives, commodities, currencies, etc
   
• Investors can trade across international markets to benefit from price parity and also hedge their positions 

The writer is founder & CEO, SAMCO Securities & Stock Note