The All-encompassing Role of Big Data in the Finance and Trading Industry

The finance and trading sector is implementing big data analytics to maintain an edge in the trading world

September 4, 2017
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Big data is something that is setting its fingerprints in almost everything, irrespective of the business or industry you’re looking at. Nowadays, it is hard to separate the big business decisions from big data and this is especially true with regards to the finance and trading industry which is feeling the biggest influence of big data with every passing day.

The vast expansion of data and the rising complexities of technology continue to change the way in which industries compete with each other and operate. Since the past 2 years, 90% of the data of the entire world was created due to the 2.5 quintillion bytes of data that was created on a regular basis. Financial services have implemented big data analytics to make better business decisions and relevant returns. Let’s see how big data has brought about a major overhaul in the finance and trading industry.

  • Increase in the accuracy of technical analysis

We know that technical analysis is tracing the price behavior by utilizing charts as the key tool. Technical analysis at the present day includes price trends, discount prices, changes in price related to volume mirroring, moving averages and recognition of resistance and support levels. With the constant growth in big data, there is more importance of the accuracy of technical analysis. Traders have therefore found more consistency in numbers and hence they’re able to alleviate risks.

  • Algorithmic trading has become synonymous with big data

If you’re a trader, you must be familiar with algorithmic trading. With the expansion of big data, algorithmic trading has become completely synonymous with big data. As the process has become automatic, computer programs can execute trades at high speeds which a human trader can’t. For the financial trading firms, technical analysis forms their major focus but real time analytics, at the same time has enough potential to alter the game for those investors who are watching out for similar access and insights which the bigger organizations have. The best thing about algorithmic trading is that there are no limitations and one can create algorithms with both structured and unstructured data.

  • Machine Learning sees a firm growth

No, if you thought that big data is only leading to strong algorithms, you’re wrong as it is also helping in the growth of machine learning which represents the highest potential of technology. Algorithms are more of data which is constantly fed and they get smarter when they keep learning from their previous mistakes, by deciding on new conclusions based on previous results and creating sensible techniques based on different unique factors.

The budding role of big data

If you thought that we’ve reached the state when there will be perfect machines which can deliver results that are 100% accurate, you’re mistaken as we’re still a long way from achieving this goal. But we are definitely moving closer to a world where each and every decision which is taken by an investor is entirely based on numerous data points.

There is disproportionate capacity for computers to capture this sector in the near future. With big data, more information will be entered into a system which thrives on knowledge of potential influencers. In short, the big data makes it easier to trade informedly and accurately which has a dramatic impact on how fiscal transactions are executed.

So, as we see big data continuing to change the infrastructure of different industries, the finance and trading sector is implementing big data analytics to maintain an edge in the trading world. This technology will soon become a mainstream necessity for most of the financial