A lot has been said about financial technologies and their growth over the last few years. Financial services are undergoing quite a transformation and a lot of it is happening in the payments, lending, and banking sectors. And while it seems like advancements in investing technology has been slow to develop there are a number of advancements worth noting which will soon change your investment strategy if they haven't already.
Over the course of the last year, robo advisors have become a hot topic. The idea behind these pieces of software is rather simple. Algorithms analyze the market and scout a proper mix of conditions in order to notify an investor about a potential opportunity.
This is not actually new at all. Automated trading analysis has been around for decades. However, only in the last year has it begun to gain widespread popularity. While banks generally offer great trading conditions and a wide selection of the trading assets, they typically cannot push people into trading easily. When a bank employee advises a client to enter a position, the process of due diligence becomes quite complex. However, when an advisory is done by a robot, banks and brokers benefit from deeper analysis and better opportunities for promoting its trading products. This way it can generate higher volume and profit.
Robo advisory is quite small when compared to payments or lending companies, yet it is growing quite fast. Just a month ago Betterment has raised 100 million dollars in funding as investors lay heavy bets on the technology. While this is the largest investment round for any robo advisory company to date there is a sense that this will not be the last.
Trusting a robot may certainly be the future of investments but there is another important service on the market. PAMM (Percentage Allocation Management Module) accounts. This service is not as known as robo advisors, but it does attract a healthy share of investors, especially in the countries where individuals are unbanked or underbanked.
The idea behind PAMM accounts is rather simple. A potential investor can choose one or more traders to invest into. Then an investor allocates a certain percentage of his portfolio to a trader. Say you have got $10,000 to invest and you want to diversify your portfolio. With PAMM accounts, you can split your capital into fifty various traders and the way to distribute the funds is solely up to you.
Perhaps the most developed PAMM account network is provided by Alpari Forex trading. Currently, it offers over 1,500 various traders for investing. Most of the traders are operating in OTC (Over-The-Counter) trading products: spot metals, contracts-for-differences, currencies and so on. However, PAMM can be used for nearly any type of investments into financial trading.
Social networks are clearly not new. Even though most of us have Facebook, Twitter, LinkedIn and other social media accounts, there is a slew of highly specialized niche networks for a wide variety of interests. There are networks for doctors, politicians and for traders as well.
Perhaps the most successful network that has managed to build up a great trading community is the TradingView Network. There are a few things that make this network great. First, it offers lightning-fast web charts for nearly every ticker. In addition, the charts come with a wide range of the trading indicators and various trading tools. This makes TradingView even one of the more handy trading networks. On top of this, the community is very active and the content published by the users is just of a supreme quality.
There are other social trading platforms too. The main difference between social trading networks and Robo-advisors or PAMM accounts is pretty simple. Instead of providing actionable information for the person to enter a position, TradingView facilitates the communication amongst the traders and let them shape their vision through the chat messages.
Trading technology is progressing quite quickly. For those with limited funds and time for their wealth management, robo-advisory can be an interesting option. If you are knowledgeable about trading but want to diversify your portfolio, PAMM accounts could be a good choice. Alternatively, signing up with TradingView is free and provides you with a powerful source for trading ideas.