While the forex market is hardly new, it has undoubtedly evolved and changed beyond all recognition since the beginning of the digital age. As a result, this market now sees an estimated $6.6 trillion traded globally every single day, with the number likely to grow incrementally in the near-term.
In general terms, it can definitely be argued that technological advancement and digitization has broken down many of the barriers to entry that once surrounded the forex market, and this is great news for non-institutional traders or those who are new to the sector.
In this post, we’ll ask how technology has improved the forex market throughout the years, while appraising what the future is likely to look like going forward.
How has Technology Empowered the Market & Individual Traders?
Arguably, the best embodiment of the way in which technology has changed the forex market can be observed through the evolution of trading platforms, which now serve as virtual brokerage sites that provide a one-stop-shop for investors across the board.
Contemporary online platforms were largely developed around the turn of the century and throughout the early noughties, initially replacing the traditional broker by facilitating orders and trades in real-time.
Over the years, they’ve become increasingly sophisticated too, evolving to include a wider range of analytical tools and technical indicators that can drive more informed decision making across an array of markets.
Such tools also underpinned new and more flexible trading vehicles, creating a scenario where traders could speculate on the performance of specific currency pairings rather than assuming ownership of the underlying financial instrument (profiting in a depreciating market in the process).
Thanks to the advent of online trading, we’ve also seen the rise of automated activity, which utilises complex algorithms to process a large number of orders within a relatively short period of time without compromising on accuracy or profitability.
This has also led to the emergence of so-called high-frequency trading, which helps seasoned investors to make the most of this advanced technology and capitalise on volatility in the market as it unfolds.
The Age of Mobile Trading and Future for Forex Market
In more recent times, we’ve also seen the dawn of mobile trading, with a number of apps having made the market even more accessible and introduced flexibility to traders from across the globe.
Thanks to this innovation (and the simultaneous advancements in mobile and smartphone technology), traders can now operate with complete freedom from anywhere, so long as they have a handheld device and a reliable Internet connection.
This has also completed the transition of the marketplace, which is no longer exclusive to elite and institutional investors and instead accessible to part-time investors on a global scale.
Going forward, the natural collaboration between AI and big data will continue to evolve online and mobile trading platforms, particularly in terms of drawing from traditionally disorganised datasets and providing investors with even greater insight and market access.
More specifically, traders are now on the verge of accessing organised data that has been harvested from social media and similar channels, creating a new and vast stream of information that may revolutionise how people trade assets such as currency.
Of course, traders can already engage in the concept of social trading through certain brokerages, but the advent of AI and big data will build on this and create an open-source conduit for collaboration.