Putting your money into the stock market is inherently a gamble. Ideally, an individual investor can remove as much of the risk as possible by gathering as much factual information about stocks and the companies behind them as possible. That’s where technology, specifically Big Data, comes into play.
Big Data goes beyond surface information to dig deep into every aspect of a company’s business and how it’s trending so that the fundamentals become clear. From there, it just becomes a matter of comparing those fundamentals to the stock price to find out if stocks are undervalued or overvalued.
Of course, the tech world can be baffling to the layman, which is why it’s so important that informative sites like TripOnTech can help you learn about issues like Big Data Security. Once you’ve got your feet wet, you might want to apply some of these Big Data-based, technologically sound principles to your investing strategy.
Let the Numbers Confirm Rather Than Lead
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- Diamandis, Peter H. (Author)
While Big Data is useful in taking human biases and preconceived notions out of the decision-making process for investing, there is also risk in letting the numbers take over completely. Perhaps the best way to implement technology into your investing process is to take the information that you gather from various sources and use that to validate or discredit, your investing theories. Let Big Data back you up rather than make the decision for you.
Go Beyond the Numbers
Just as word of mouth could often determine a company’s fortunes in the past, social media is something that can now make or break a company, or at least greatly affect their stock price in the short term. Getting real-time information about trending topics, or even finding out if the latest viral sensation involves a publicly-traded company, can go a long way toward telling you which stocks are about to rocket upward or, if the information is negative, which are about to take a dive. Big Data can provide that crucial information.
Playing On the Same Field with the Big Boys
One of the amazing developments in technology is how the Big Data that was once in the hands of a precious few is now becoming available to everyone. That means that individual investors have the ability to make decisions about buying and selling stocks with access to the same information as huge firms. Apps, computer programs, and various other forms of artificial intelligence that can help out with investment decisions are available to you, so it’s important that you make use of that knowledge and gain the same advantages as institutional investors.
Some people may have access to Big Data but might be afraid to use it in their investment decisions, which, in a way, proves why it is necessary. Things like algorithms and artificial intelligence go beyond human emotions like fear and also don’t take into account personal biases that a person might have in favor of or against a specific stock or company. While those human elements might have hampered investors in the past, they are largely eliminated with the use of Big Data.
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Some investors might be uncomfortable with the idea of putting a computer program or an algorithm in charge of their finances, which is understandable. Your comfort level has to be taken into consideration or investing will become a torturous, stress-filled process. As stated above, that’s why investors should consider using Big Data as a verification method for trades that they want to make. Or they should take the data into consideration if it is pointing them in the direction of a trade they might not have otherwise considered feasible. Striking a balance between information and insight is crucial.
Get Some Assistance
Technology has improved to the point where all the information provided by Big Data can be brought to your fingertips in an instant. The problem is that the amount of information might simply be overwhelming to an individual investor, who might not have the time to synthesize it or the wherewithal to comprehend it in the time needed to make a timely stock trade.
For that reason, perhaps the best way to utilize the reams of data you receive is to find professionals who have the expertise to do that for you. These professionals, known as quants for their ability to make a quantitative analysis of stocks, know what information is pertinent and which can be weeded out. They are utilized by big brokerage firms for their technological prowess, and if you can find one that you trust, that might be the easiest way to harness the power of Big Data for your individual investments.
So don’t get caught watching everyone else benefit from Big Data. Let technology work for you and your portfolio over the long haul.