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How Collective Intelligence Aids Trading Strategies


Whether you’re a day trader or causal trader, you have some sort of trading strategy. Yes, not having one is technically an investment strategy, but isn’t advised by anyone. To be a successful trader, you have to search for new ways to take advantage of the stock market and formulate the best trading strategy for your investments. A concept that is having a positive impact on the financial markets is collective intelligence.

What is collective intelligence?

How Collective Intelligence Aids Trading Strategies
How Collective Intelligence Aids Trading Strategies

At its core, collective intelligence is based around teamwork. Truly unlocking collective intelligence requires more than a whole person. It necessitates a group of people thinking within the same context. In the United States, the Founding Fathers would be a prime example. Collective intelligence is often seen in corporations around the globe. Whenever advanced people come together to tackle complex problems, often a collective intelligence is present.

This concept can be seen in artificial intelligence as well. People spend so much time on computers, tablets, and phones but often fail to comprehend the vast network of computers working on the backend to make all of that available information possible. Much like in cryptocurrencies. Many believe that a network of computers and crowdsourced information exceeds human potential.

How collective intelligence permeates through the world of a trader.

How collective intelligence permeates through the world of a trader.
How collective intelligence permeates through the world of a trader.

For trading strategies, this concept is rooted in collaborators. And it comes encompasses the entire trading system. Professional traders have worked together for decades on cross-functional teams to be the financial instrument for millions of people’s individual accounts. They would share technical analysis of the market fluctuations and offer personal insights into how to best manage mutual and hedge funds. All of their decisions of an individual trader would be in alignment with the account.

In today’s integrated world, computers are automating much of this process. Their ability to process algorithms, analyze stock volatility, and quickly gauge trend trades make artificial intelligence the future of trading strategy. Available information is almost instantaneous to a processor. When a trader buys an investment in Seattle, the computer would be able to input that information.

It doesn’t necessarily have to deal with the purchase of stocks by a trader, either. Active trading strategy takes the business into account. If there is a large uptrend in Cisco routers being sold, the response of the computer would be to offer trade ideas for capitalizes on this information. Every time a credit card is swiped or an item is put in a digital shopping cart there is data being shared. That data is having an impact on every trader.

The amount of data that currently exists is staggering. Even with user data privacy, there are trillions of gigabytes of information that exist. Companies like Snowflake have optimized the storage of such data. Looking at their analytics will show the metrics for how massive this information is. This upsurge in data impacts what information a trader might see given what platform they use to operate their investments.

The future of trading strategy with the expanse of collective information.

A beginner or advanced trader might have some hesitation to how technology will impact the markets moving forward. This is nothing new to investing. Though the number of technical indicators will only expand as data collection and analytics improves, how it will directly fluctuate the markets is still unclear. Will a trader take a risk on more penny stocks? Will there be growing popularity in becoming a day trader? Will the stock market become more volatile for the day trader? Only time will tell.

What is for certain is that collective intelligence is only going to become more prevalent. It will spread into other aspects of trading strategy. The casual trader and the day trader will have to adapt to it.