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The Role of Technology in Modern Trading

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Questions and Answers

Which technological advancement allows traders to buy and sell financial instruments electronically without the need for physical exchanges?

High-Frequency Trading (HFT)
Electronic Trading Platforms (correct)
Blockchain Technology
Big Data Analytics

What is the primary characteristic of algorithmic trading?

Using computer algorithms to execute trades based on predefined criteria (correct)
Manual trade execution and relying on human decision-making for each trade
Trading without any data analysis and making decisions randomly
Only trading during market hours and avoiding any after-hours activity

What does high-frequency trading (HFT) focus on?

Long-term investment strategies and holding positions for extended periods
Executing a large number of orders at extremely high speeds (correct)
Manual order placement and relying on human traders for each decision
Reducing market volatility and ensuring stable market conditions

How do Artificial Intelligence (AI) and Machine Learning (ML) transform trading?

By providing advanced data analysis and predictive modeling capabilities (B) Signup and view all the answers

What advantage does blockchain technology provide in trading?

An immutable and transparent record of transactions (B) Signup and view all the answers

What feature do mobile trading apps offer to individual investors?

Real-time quotes, news updates, and the ability to execute trades on the go (B) Signup and view all the answers

What sources of data are commonly used in big data analytics for trading?

Market data, news articles, social media posts, economic reports, and transaction records (B) Signup and view all the answers

How does cloud computing benefit trading firms?

By providing scalable computing resources and reducing costs (B) Signup and view all the answers

Which of the following is an impact of algorithmic trading on the market?

Reduced human error and increased market efficiency (B) Signup and view all the answers

What is a potential concern associated with high-frequency trading (HFT)?

Increased concerns about market stability and fairness (B) Signup and view all the answers

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