How New Technologies Are Impacting the Forex Industry?

The forex market is one of the biggest entities of its type anywhere in the world, with an estimated $6.6 trillion traded globally every single day.

Make no mistake; trading volumes have increased markedly in line with technological advancement, with innovation having removed many of the barriers to entry that once surrounded the forex market.

In this post, we’ll look at the role of technology in the forex market and how now innovations are impacting on the industry.

What’s the Role of Technology in Forex Trading?

During the digital age, the forex market has evolved to become a primarily online entity. This evolution has seen online brokerage sites replace corporeal middlemen, while serving as one-stop resources for learning, practicing and executing trades.

In this respect, technology is central to every aspect of forex trading in the modern age, while the emergence of online platforms and mobile apps such as the MT4 has laid the foundation for new innovations to shape the market of tomorrow.

For example, one of the newest technologies to impact on forex trading is automation, which enables individuals to negate the risk of emotion and human error and execute more efficient trades. It also allows for a higher volume of trades to be executed in real-time, which is ideal for scalpers or day traders who profit from short-term price fluctuations in the market.

Apps such as the aforementioned MT4 even feature their own ‘Expert Advisors’ (EAs), which are advanced pieces of software that automatically initiates and execute trades according to informed and predetermined instructions.

The Rise of AI and its Impact on Forex Trading

Interestingly, JP Morgan estimated that 90% of modern-day trading is run by computers, algorithms and passive managers, with this trend underpinned by the rise of automated trading.

Technology has also evolved to introduce artificial intelligence (AI) to the forex market, taking the notion of automated trading to another level entirely.

By utilising processes such as machine learning, AI can make a high volume of accurate and informed decisions in a matter of milliseconds, and at a far faster rate than the human brain. As a result, AI is an incredibly powerful tool in the modern forex trader’s armoury, and one that has empowered high-frequency trading amongst professional scalpers across the globe.

What’s interesting about concepts such as automation and AI is that they work together so well to create a more accessible and potentially lucrative forex market, while each is built on the development of online trading platforms and tools such as the MT4.

In many ways, enduring technologies of this type are fundamental to the modern forex market, particularly in terms of allowing greater accessibility and affording part-time traders to utilise the same tools as professional and institutional investors.

It’s this that continues to see daily trading volumes increase across the globe, with this trend unlikely to change as similarly advanced technologies continue to evolve.