EVOLVING MARKETS

The market is dynamic. It is not the same as it was, yet it is driven by the same underlying economic forces.
What Has Changed?

• The equipment has changed, allowing instantaneous analysis, program
trading, electronic orders (smart order entry), high-momentum trading,
and unreasonable expectations.
• Methods have changed, with far more systematic traders, especially professional
fund managers.
• Participants have changed, with a larger influence from pensions, designer funds, and institutional investors. Day traders are common because commissions are low.
• Electronic exchanges and side-by-side trading are new. You can beat your competition by creating an electronic order the instant a system “signal” is triggered.
• Globalization has changed the way world markets move, with alternating leaders and followers.
• There are more trading vehicles, including ETFs for index and sector investing, and single stock futures.
• Markets are noisier because of more participation. Sometimes they have irrational swings because of piggy-backed orders. The frequency of extreme moves is increasing, causing greater volatility.
Will a system that worked in 1990 work in 2002? Probably not. Will the people who made money in the 1990s make money now? If they change, too.