The Role of Analytics in Transforming Market Data

As advisors and investors look to technology for added efficiency and increased information/education in trading, analytics play a critical role in the trade process by transforming market data into intelligent and actionable information. In the United States alone, the number of traders has more than doubled over the past 10 years, with active traders and power traders making up more than 30 percent of today’s total trading population, according to Aite Group; with this overall change in market composition, investors’ access and comprehension of market data have taken renewed precedence.

Today’s advisors and investors require advanced tools that enable them to follow the market without having to take on the burden of extensive market research—this is where analytics come into play. By filtering complex data points into easy-to-digest language, investors are better able to recognize, understand and act on trading strategies within a given market, thereby optimizing their trading activity and generating higher profits.

Analytics are also valuable in reducing the amount of time investors spend engaging in and managing the trade process. According to a recent Aite Group study, stock traders that placed 500 or more trades annually viewed time management constraints as the primary reason for not trading more often. The second most important success factor for this segment of traders was the need to learn more “proven trading strategies.” Analytics directly impact both of these needs by eliminating time and complexity in trading, thereby driving trade volume.

According to Tony Zhang, Head of Product Strategy, OptionsPlay®, the majority of trading platforms currently available to advisors and investors are time consuming and complex. However, through its use of detailed analytics, OptionsPlay® Ideas provides users with summary data and market insight – including current trends and overall stock strength – to inform them of whether a particular trade is worthwhile. The analytics behind this advanced platform helps to simplify the trading experience, leading to increased ROI for firms and investors alike.

According to the Aite Group study, up to 40 percent of traders rely on their brokers for trading insight and information, and with the added resource of reliable analytics, brokerage firms are better equipped to provide their clients with more targeted insights. As a result, advisors and investors – including those who don’t trade as often – gain greater confidence in their trading decisions, which leads to more frequent and strategic trading decisions for both parties.

If you missed our recent webinar, access the complete on-demand webcast here: “The Power Play: Leveraging Options Trading to Accelerate Customer Transaction Activity”

For more information on Aite’s recent research, click here.

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