The only constant with trading the markets is...The only thing constant about financial markets is that they change.
And since 2007 or so, with the higher availability of trading different instruments and markets world-wide.
And not to mention, the ability to go long (buy) and go short (sell).
Yes, these everyday possibilities were difficult to find and trade back then.
Now I’m speaking my age in the markets. But it’s important to know, the algorithms are changing the game every single year.
As long as you’re a trader you need to be able to learn, grow, adapt and evolve with every changing markets.
Let’s go into details about WHY the markets are changing…
Since around 2007, the landscape has undergone significant transformations, driven by several key factors that shape the dynamic nature of these markets.
1. Globalisation and Technological Advancements
Traders now are able to gain access to enhanced connectivity, facilitating participation in markets worldwide.
They also have amazing trading and charting platforms like TradingView.
This increased speed of information dissemination and transactions has a profound impact on market dynamics. And this helps contribute to the perpetual state of change.
2. Diversification of Instruments and Markets
The availability of diverse financial instruments, ranging from stocks and bonds to commodities and cryptocurrencies, has expanded trading possibilities.
Each year we seem to have more assets, markets, instruments, structured products and choices.
It's building into a trading universe in a way.
And each market possesses unique characteristics influenced by distinct factors.
This diversity introduces complexity to trading strategies. And this requires traders to navigate a broad spectrum of instruments with different behaviors.
As long as there are new and improved assets, the markets will always change.
3. Long and Short Positions
Unlike in the past, where shorting certain markets proved challenging, the ability to go long (buy) and short (sell) has become more prevalent.
This flexibility allows traders to capitalize on both upward and downward market movements.
With the ability to go long and short a variety of markets, this is changing the financial landscape of the markets.
Price action no longer moves in a Zig Zag 45 degree motion.
There are more dips and rallies without strong trends, like in the past.
All because of the intrciacies of long and short positions also adds intricacy to risk management strategies. talking about algorithms.
4. Rise of Algorithmic Trading
Algorithmic trading has emerged as a game-changer in financial markets.
This involves using computer programs to execute trades based on predefined criteria.
The influence of algorithmic trading is profound, contributing to increased liquidity, faster execution, and the development of innovative trading strategies.
As algorithms evolve each year, they continually reshape the dynamics of the trading landscape.
5. Market Participants and Strategies
The composition of market participants has evolved, with institutional investors, hedge funds, high-frequency traders, and retail traders all playing pivotal roles.
All of a sudden we've seen a spike in the new trend of trading with Smart Money Concepts and Inner Circle Trading, in the last two years.
These changes in the behavior and strategies of these participants can swiftly impact market trends and volatility.
The influx of retail traders, facilitated by online platforms, further adds new dynamics to the markets.
So once again, the only constant for traders is the change that is taking place in the financial landscape and market universe.
Traders who evolve, adapt, acknowledge and respond effectively to the perpetual state of change are better positioned for success in this dynamic and challenging environment.
