In the 21st century, innovation and new inventions are appearing in all aspects of our daily lives. From wireless charging to electric vehicles, virtual reality, and artificial intelligence, every year, new products are created to make our lives easier, more productive, and more fulfilling. Products become cheaper, more efficient, easier to use, are made with better materials, and are consequently held to a higher standard of quality. This is also reflected in the financial sector, where algorithms and trading programs are becoming more and more commonplace to help out regular investors. Although there are certainly many opportunities in the new technology that has entered the finance and investing scene, it is important to be wary of those with malicious intent – especially where your money and finances are concerned. Keep reading to learn about some of the innovations taking place with existing financial technology.
The On-Balance-Volume Indicator
Firstly, indicators are now very prevalent in the financial trading community for their ability to show investors market sentiment and help them predict how an investment may turn out. One example of this is OBV or On-Balance-Volume. Now, you may be asking yourself, what is on balance volume? Well, this is an indicator that shows you how a financial security’s volume is moving, and it may help you to predict the direction it will go. As a reminder, it is key as an investor to do your own research as well as use the financial tools at your disposal, as they are never guaranteed to produce 100% accurate results. To calculate the On-Balance-Volume yourself, you’ll want to read this article for more information. Although it is an effective indicator, the On-Balance-Volume tool may throw amateur investors off. This is because it disregards the closing prices of the securities it tracks and focuses instead on the daily volume traded, using this to calculate its predictions. This can lead to graphs that vary wildly from the actual price of the investment it is tracking, which is something any investor using the OBV indicator must keep in mind at all times.
The Ichimoku Cloud Indicator
Additionally, another indicator that is a recent innovation in the finance world is the Ichimoku Cloud. This indicator is a collection of indicators that will show you the resistance levels and the support levels, which can help to show the momentum and trend direction of the market and specific financial security you’re looking at. Using averages, the Ichimoku Cloud can also project these support and resistance levels into the future to give traders a general idea of where the price could end up.
The Ichimoku Cloud is not a Moving Average and is different from any indicator using Moving Averages to forecast the market. Although they both use averages in their calculations, the Ichimoku Cloud is based on the lows and highs of a price over a certain period and is then divided by two, among other more specific calculations. The Ichimoku Cloud indicator has the benefit of being favored by many prolific investors. Thus there are many tutorials from the financial community on using this helpful tool. If you’re interested in how the Ichimoku Cloud works, be sure to read up on it here.
Trading Bots and Programs
Another recent innovation in financial technology is the implementation and development of trading bots, which can do all of the hard and taxing work of tracking indicators for you, opening positions and investments in the financial markets of your choice when you wish. They can even close positions when the market begins to take a turn for the worse, potentially saving you money. However, one downside to these programs is that they are not always accurate and may hurt your portfolio more than they benefit it. Here is a list of the 10 best trading bots in 2022, although be sure to verify the reviews of these programs before using them. Trading robots can help eliminate the emotion that comes with investing; however, they are also less averse to risk than you may be willing to tolerate, and therefore caution is always recommended.
What Now?
In conclusion, there are many new inventions and innovations that have been introduced to the financial technology sector over the last few years. There are plenty of different companies, products, and services available to even the newest investors, but it is critical to remain vigilant and avoid bad actors. This can be done by working with trusted professionals, reviewing any programs you use and download, and staying informed on any changes to the technology you are using, such as new updates or changes. The worst thing that could happen would be that a new update to your repertoire of indicators and programs completely throws your trading strategy into disarray.
