How The Stock Market Evolves

Most technical analysis complain that the market has changed and making stock predictions is becoming more and more difficult.

They say that stock market trends are no longer able to trusted or predicted with any form of consistent accuracy.

The truth is that this is very true. However, the market has been consistently evolving and changing since its inception. If the market stayed the same, it could be easily gamed by sophisticated players It is this constant evolving that allows the market to survive. Let’s take a closer look.

Traders have been seeking to gain an edge since the inception of the stock market.

In the old days, being on the trading floor was the ultimate advantage. However, due to membership requirements and geographic restrictions, not everyone who wanted to be a trader could trade on the exchange floor.

Technology like the telegraph and telephone provided off the floor traders their first edge during the infancy of day trading.

These tools were faster and more accurate than the old methods of doing business.

The next dramatic breakthrough came with the Small Order Execution System traders. Known as the SOES Bandits, these innovative traders gained the speed and execution edge over the competition. Not to mention laying the groundwork for the active trading boom.

Today, execution speed and accuracy remains a true edge in trading. An entire segment of the market relies on these two factors for its profit making advantage.

Known as high frequency trading, or HFT for short, this trading form has truly pushed the speed advantage to its ultimate level which is the speed of light.

These investors define speed in nano seconds and using co – located servers, these market players have redefined the trading landscape, just like their edge seeking predecessors throughout market history.

Does this mean that the old way of doing things no longer works? Of course it doesn’t. While technology has changed the market, many edges still exist for traders of every size to exploit. Find these edges rather than complaining!

Source: http://www.tradingtips.com/how-the-stock-market-evolves/