Last month our team attended the iFX EXPO ASIA in Bangkok. As the largest B2B fintech conference, the Expo brings together leaders of the industry. This was an excellent opportunity to connect with our clients and demo recent enhancements to our innovative one-stop shop of investment research.
Trading Central's Chief Operating Officer Jerome Favresse, participated in a panel session at the Expo titled: The Trader Mind vs Technology in Time of Uncertainty. The session addressed traders' mindsets, behaviors and the latest technology developments to enhance a trader's journey.
Newbies haven’t seen these market conditions: The volatility we’re seeing in today's markets, with tiny flash crashes, is something atypical for the last decade. When looking at what happened in 2020, we saw a quick market correction. Many retail Gen Z investors have never experienced a bear market and could feel uncertain fearing more corrections.
How are traders responding to such volatility? Are the markets more rational or more emotional? Asset markets and hedge funds are more rational in their decision-making as they are often well-informed and have strong trading habits. This element is what is missing for many investors. Retail clients are more emotional as they don't know how to accept and manage risk effectively; thus, they leave the market very quickly with low profits.
How should we balance human decision-making with automated trading? The panel thought a combination of both is necessary. Investors should understand how to apply technology to their trading strategy as they are powerful when it comes to entry/exit timing and risk management.
What is a downside of automation that traders should be attentive to? Using technologies like artificial intelligence and natural language processing in combination with other analytics, we can map the emotion leading the market, such as fear, joy, and anger, to minimize what will happen next. This helps investors understand the different stages of the market and act accordingly. The predominant emotion leading the market now is fear.
Watch the full panel session: