Forex trading has grown exponentially in the digital age, thanks to technological advancement that have made it easy for millions of people worldwide to participate in the $5.1 trillion marketplaces. Technology and innovation have given rise to some of the most effective and reliable tools for trading the currency market. Automated trading is one of the biggest innovations of technological advancement in shaping forex trading.
Automated Trading Guide
Gone are the days when automated trading was the precept of large institutions. Retail traders from all walks of life are increasingly leveraging various automated trading tools to squeeze profits from the forex market. Automated trading allows traders to establish specific entry rules and exit that are programmed conversely executed by computers.
Such systems scan the markets 24 hours a day, as long as the market is opened, searching for profitable trading opportunities. Besides, automated trading systems execute trades automatically whenever set conditions are met and lock in any profits. In automated trading, the algorithm also boasts of stop-loss features that cap and control potential losses without manipulating open positions.
Technology advancements have enhanced automated trading systems making them highly effective in scanning the market for trading opportunities and executing trades. Likewise, tech has also revolutionized traders in ways that few people could ever imagine.
Tech: Breaking Down International Barriers
Technology use in trading has enhanced accessibility to various markets around the world. Traders in the U.K and the U.S have benefited a great deal as they can now trade any market regardless of time difference.
The opening and closing hours of the Asian markets have always provided a significant entry barrier, given the time difference, but not anymore. Technology has eliminated the entry barrier by enhancing the concept of automated and high-frequency trading.
With the help of automated trading systems, the U.K and U.S traders’ can still participate in the Asian markets even when they are asleep. In this case, traders can schedule trades and execute high volume orders.
Increased accessibility of the Asian market thanks to automated trading has helped boost the region’s recovery in the wake of the COVID-19 pandemic. Likewise, there has been strong demand for safe-haven assets such as the Japanese Yen. Technology has also helped traders leverage the strong Hong Kong Dollar in the wake of increased fiscal spending in the region.
Social Trading and Networking
Technology advancement has also given rise to a new spectacle dubbed social trading. Gone are the days when the financial markets were the domain of large financial institutions or people with close ties to brokerage firms.
Social trading is a new concept that allows traders with limited trading skills to participate in trading. Technology advancement has given rise to platforms and forums that pools traders from all over the world together to share trading ideas and opportunities in the forex market.
Similarly, experienced traders have been able to connect with novice or beginners and share insights on how to go about trading. The social trading phenomenon has also given rise to copy trading, whereby experienced traders allow other less experienced traders to copy any of their trades in the market.
Increased networking between traders thanks to technological advancement has enabled traders of all descriptions to replicate successful trades, therefore optimize profits regardless of the economic climate.
Enhanced Market Accessibility
Forex Market is billed as the biggest market place in the world with a daily turnover of more than $5 trillion for a reason. Technology advancement has reduced the barriers to entry, allowing investors from various parts of the world to trade regardless of the time zone.
While screen-based forex trading started in the early 1990s, an innovation has come into play, making it possible for people to access the market with ease. Computers and high-speed internet connectivity have become the new norm in the highly liquid marketplace.
Besides, the smartphone revolution has also transformed the forex market in ways that few people could ever imagine. More and more traders are relying on mobile applications to access and trade the forex market. In this case, traders continue to trade while still on the go and not being limited to trading from home.
Broadband Mobile Network Enhancement
Automated trading has become a preferred mode of trading for institutions and retail investors, thanks to technological advancement in mobile networks. The mobile internet network has transformed the forex trading landscape thanks to high-speed connections.
4G connectivity has done a pretty excellent job of reducing latency in the forex market. High-speed internet connections mean automated trading systems can scan the market for trading opportunities in real-time and place trades within seconds whenever opportunities crop up.
The roll-out of 5G connection is expected to take automated trading to new heights as the technology gives rise to an internet connection three times faster than 4G. Wider network coverage and faster upload and download speeds would be an added advantage to traders looking to make transactions faster and frequently in the currency market.
Artificial Intelligence in Forex Trading
The use of Artificial intelligence is poised to enhance automated trading by improving predictive analysis. In the future, forex traders will have access to predictive analytics software sure to enhance automated trading.
Predictive analytics will allow traders to make better strategies that lead to better outcomes in profit generation. Also, traders will be able to focus purely on transaction planning rather than analyzing data and monitoring trades by themselves.
It does not come as a surprise that current and emerging technologies are changing the forex landscape. Thanks to technology and innovation, more than 43% of traders in the forex market are in the millenniums’ age group.
Advancement in technologies such as machine learning and artificial intelligence is poised to further the foreign exchange industry’s growth. The technologies should enhance the art of trading while limiting the barriers to entry.