From telegraph to AI: How traders' tools changed over 400 years

​Four centuries ago, traders learned about markets through conversations with merchants, letters and printed price lists. Today, their workspace can include multiple terminals, algorithms and AI. The time needed to receive information has shrunk from days to microseconds—but has the basic principle of trading really changed?

The first stock markets emerged long before computers and even the telegraph. The Amsterdam Stock Exchange traces its history to 1602, when shares of the Dutch East India Company began trading.

View post on X Loading...

The tweet was deleted by the author.

But we saved everything 🙂.

Back then, information was the scarcest resource. A trader needed to learn about a ship's arrival, a war, a harvest or a change in trade routes before everyone else and act on that information before it became widely known.

Four centuries later, the challenge remains the same. Only the tools that shorten the path from an event to a trade have changed.

From coffeehouses to trading terminals

In the 17th and 18th centuries, networks of personal contacts partly served the role of today's trading terminals. Deals were not made only on exchanges: market participants met in coffeehouses, exchanged news, discussed prices and found counterparties.

One of the earliest detailed descriptions of such a market appeared in Confusión de Confusiones, published by Joseph de la Vega in 1688. The book covered stocks, options, speculation and investor behavior during sharp market moves—topics that remain familiar to traders today.

There was no continuous stream of market quotes. Prices circulated through traders' notes, letters and, later, newspapers, meaning that hours or even days could pass between a market move and the information reaching another city.

In the 19th century, the telegraph began to solve this problem. The story of Reuters is particularly illustrative: Paul Julius Reuter used carrier pigeons to transmit financial data between Aachen and Brussels, where there was a gap in the telegraph line. The pigeons crossed the gap faster than conventional transport, allowing Reuter to deliver market quotes ahead of competitors.

Once the cities were connected by telegraph, the pigeons were no longer needed, but the race for speed only intensified. In 1867, Edward Calahan created the stock ticker, which transmitted quotes over wires and printed them on paper tape. Thomas Edison later improved the system, allowing identical data to be delivered simultaneously to multiple subscribers.

For the first time, the market began to extend beyond the exchange building itself: brokers no longer had to wait for a messenger to learn the latest price. By the early 20th century, the telephone had joined the ticker tape, allowing orders and information from the trading floor to move faster.

Markets move onto screens

During the 20th century, paper gradually gave way to electronic systems. In 1971, Nasdaq emerged as a market without a traditional trading floor, with market-maker quotes distributed through computers.

In the 1970s, Reuters began developing electronic market data services, while Merrill Lynch received the first Bloomberg terminals in 1982. Instead of relying on newspapers, ticker tapes and separate phone calls, traders gradually gained a single workstation combining quotes, news, charts and calculations.

View post on X Loading...

The tweet was deleted by the author.

But we saved everything 🙂.

The next shift transformed not only access to information but the trading process itself. In 1992, CME launched Globex, while online brokers allowed retail investors to view markets and submit orders from personal computers without contacting a broker.

At the same time, electronic order books and automated order-routing systems developed. Computers were no longer just screens: they could choose a trading venue, split large orders into smaller ones and execute them according to predefined rules.

Computers start trading on their own

The next step was algorithmic trading. Programs learned to react to changes in prices, volumes and spreads faster than humans, followed by the rise of HFT firms, where competitive advantages were measured not in minutes or seconds but in milliseconds and microseconds.

Exchanges adapted to this race. Professional market participants began placing servers in the same data centers as exchange infrastructure to reduce the latency involved in transmitting orders.

The difference from the 19th century appears enormous, but the principle is the same. Back then, an advantage could come from a carrier pigeon or a faster telegraph connection. Today, it can come from a server located closer to an exchange's order execution system.

By the 2020s, the range of available data had also expanded. Beyond price and volume, traders gained access to social media, alternative data sources and, in crypto, onchain analytics. Public blockchains make it possible to track transfers between addresses, the activity of large holders and flows to exchanges almost in real time.

Platforms such as Nansen and Dune have turned this information into a separate class of trading tools. Users can monitor large wallets, build their own dashboards and receive transaction alerts shortly after activity appears onchain.

View post on X Loading...

The tweet was deleted by the author.

But we saved everything 🙂.

The latest layer in this evolution is AI. These tools already help process news flows, identify patterns in large datasets and provide market analysis through natural-language queries.

Information advantage measured in microseconds

Each new technology initially gave an advantage to a limited group of market participants. The telegraph, stock ticker, Bloomberg terminals, electronic exchanges and algorithms gradually evolved from competitive advantages into standard market infrastructure.

The same process is now taking place with onchain analytics and AI. Tools that until recently were largely available to professionals are gradually becoming part of ordinary trading applications.

As a result, the market's fundamental scarcity has changed little over 400 years. Traders still need to obtain information before others, interpret it correctly and execute a trade before the advantage disappears.

Only the speed of the process has changed. Where it was once measured by the time needed for a letter or ship to arrive, some parts of today's market operate on a microsecond scale.