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As a society, we have become increasingly reliant on technology since the turn of the century. Almost every single growth industry has been driven by technological advancement, while even modest, everyday activities have been revolutionised through innovation and creative thinking. While this has been largely beneficial for businesses, employees and consumers alike, it is somewhat intimidating for those who have failed to embrace technology and its numerous advantages. In terms of financial market trading, technology has and will continue to have a significant impact on how investors execute transactions and manage their portfolios. This has led to a period of transition for experienced traders, who have been forced to reconsider their methods and incorporate technological tools and applications into their investment regime. Such a process demands a willingness to learn and evolve, which is not easy for individuals who have become set in their ways and existing routines. An Evolving Industry: How Technology has Changed Financial Market Trading With this in mind, it is worth evaluating the role of technology and the impact that it has had within the financial markets. Consider the following: - Online Trading Platforms and Mobile Applications Cloud and web based technology has had a huge impact within the commercial and corporate worlds, primarily because they have enabled businesses to embrace innovation without compromising their operational budgets. Financial traders have also benefited from the development of cloud orientated software, through the use of online trading platforms and mobile applications. These programs have helped to maximise the efficiency of modern day traders, as they enable investors to monitor the markets in real time and execute orders in line with topical price movements. The development of online trading platforms have also had a far deeper impact, however, both in terms of removing barriers to entry and changing the fundamental role of online brokerage firms. Firstly, the increasing accessibility of cloud based technology has removed many of the barriers to entry facing independent or part time traders, and enabled them to compete within a crowded and competitive market. Secondly, the service offered by brokers has also changed to incorporate technology, with many now operating online and marketing themselves through their range of trading platforms and software. Automated and High Frequency Trading (HFT) Increasingly, technology is also changing the trading strategies adopted by investors. Thanks to techniques such as automated and high frequency trading, investors are now able to execute profitable transactions according to predetermined programming and algorithms. Automated trading has become particularly popular since the launch of the inaugural World Championships in 2007, after which time it has been embraced by a growing number of investors operating in developing economies and nations across the globe. High frequency trading is a slightly more controversial concept, however, as it is a method that utilises sophisticated algorithms to execute numerous, instantaneous transactions. These generate profit from even minimal market price movements, and a number of government bodies have expressed concern that such short term positioning is likely to increase market volatility and trigger instability. With Germany the latest country to vote on new laws to help regulate the practice, high frequency trading may yet be an example of how technology can push boundaries too far. The Bottom Line for Financial Traders These developments have altered almost every facet of financial market, from the way in which trades are executed to the role of brokers and individual account managers. They have even helped to create a brand new range of trading strategies, which encourage an increasing reliance on technology and look to eliminate direct human involvement and emotion from the process. Although these strategies undoubtedly reflect how technology has the potential to divide opinions and push the boundaries of possibility too far, their soaring popularity among younger investors suggests that with proper regulation they can find a home in the financial market. In terms of online trading platforms and their corresponding mobile applications, the benefits to traders have been indisputable. This is especially true for independent and part time traders, who historically would have struggled to keep pace in a real time market and execute timely trades. To succeed as a financial market trader in 2013, it is crucial to partner with a reputable online broker and adopt an online platform that suits your portfolio. Service providers such as the internationally renowned, online broker Alpari offer an ideal starting point, largely because they offer access to one of the widest choice of trading platforms available. -
The Interbank Market excludes retail investors and accounts for roughly 50% of the forex transactions that are conducted on a daily basis. The activity seen on this level can greately impact price activity seen at the Retail level, as trades made can can drastically influence liquidity levels and short term trend fluctuations.
