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How big data influences the stock market?

How big data influences the stock market?

In the real world scenario, if the market manipulators are removed from the question, buying stock becomes a worthy accusation. By acquiring stock, you place high stake on how the company functions, since the market in itself is a true determinant of the value of the company you’re investing in. But, what if the data, on which the decisions are to made, increases manifold. Read on to know how this instantaneous rise in data influences stock markets.

Due to the excessive dependability and usage of mobile devices, new media and social media, there has been a massive increase in the amount of data being generated and processed. This rising data quality is a result of spontaneous shift of digital occupancy from office to online.

Big Data and Stock Markets

Over the years, the rise in data (dubbed as big data) has been almost a billion times than it was before, say the rise of the mobile phenomenon. Since, rise in data trading volumes have increased a billion times which has brought about a influx in trade transaction by a similar number.

Big data

Big data is humongous data sets which are virtually impossible for conventional technology to process. Big data offers great advantage to companies, only and only if they can have the IT infrastructure and the manual know-how to manage and process this data.

Elements of big data:

  • Over 90 percent of the data in the world has been created in the past two odd years
  • It is estimated that in comparison to 2009, data production will be about 44 times more by 2020
  • The enormous data increase is fracturing IT infrastructure of the stock market

The Stock Market

In the stock market, people buy stocks – one, because they like the company and two, they want to be a part of its growth phenomenon. But, it has been seen that there is already a very limited inclusion of real human wisdom involved in the stock market.

We mean that the number of transactions being transacted on the market by real humans is really a very small fraction of the daily trading volumes. This means the real money game of buying and selling stocks by the most serious traders are being enacted by automated systems that do the most gruesome work. In such hue and cry, where my algorithm on the market is better than yours, the entire stock market has become a robot war and has increased the amount of processable data to an extent which has become difficult for market’s IT infrastructure to handle.

In the stock market, each trade creates a ripple effect, the size increases with the size of trade. When trading happens at speeds beyond control, the ripple effect can confuse other machines, which leads to an influx in buying and selling of stocks until profit making is maximize. Even though the market is influenced by the ripple effect, current stock holders make all efforts to keep the system operational.

However, due to speed, scale and volume of the kind of data being created on the stock market, the problem of mapping the data has been growing manifold.

Big data if not managed properly in itself can be dangerous for the market, and coupled with speed, scale and volume (so large) the effect will surely be something new for the market. With the growing speed the data is making the human touch extremely insignificant in the market. The market is becoming a robotic battlefield, where large IT infrastructure and supercomputer are going to play the money game.