The Technological Evolution of Trading
- July 12, 2022
As technology has evolved, trading has changed dramatically. For the individual trader, technology has made it possible to trade forex from anywhere in the world at any time. For institutional traders, technology has transformed the speed, complexity, and cost of trading. Let’s take a look at the ways in which tech innovations have revolutionized retail trading.
The History of Trading and How It Has Evolved Over Time
From a historical perspective, trading has evolved significantly over time. In the past, traders would have to physically go to a trading floor in order to trade. This would involve yelling out prices and trying to out-compete other traders in order to get the best price for their product. As a result, the financial markets were exclusively traded by banks and financial institutions that employ professional traders to handle their funds.
Nowadays, trading can be done online from the comfort of your own home with trading apps. All you need is a computer, an internet connection, and a trading account. Therefore, technology has made it much easier and more convenient to trade. Let’s look at these benefits in detail.
Five Ways Technology Has Changed the Way We Trade
There are a number of ways in which technology has changed the way we trade.
Firstly, technology has made it possible to trade 24 hours a day, five days a week. In the past, trading was limited to traditional market hours. As a result, traders would have to wait for the market to open before they could trade. However, with the advent of online trading, traders can now trade whenever they want. This is because there is no need to physically go to a trading floor. All you need is an internet connection and a computer.
As a result, retail investors have access to data from different parts of the world and can speculate on price movement in different trading sessions. The overlap of different sessions makes it possible to trade all day.
Another way in which technology has changed the way we trade is by providing global access. In the past, traders were limited to trading within their own country. This was because of things like language barriers and regulations. However, with online trading, anyone can trade from anywhere in the world.
This global access is further aided by forex brokers that can be accessed from different countries. Brokers provide liquidity and allow traders to find counterparties to their trades.
Another benefit of technology is that it has increased the speed at which trades can be executed. In the past, trades would take days or even weeks to settle. However, with online trading, trades can be settled in seconds. This is because there is no need to physically go to a trading floor and execute the trade.
Furthermore, traders now have access to forex trading robots. The development of trading robots has been a valuable advancement for forex traders. These are computer programs that can automatically execute your trades based on a set of predefined rules. This allows traders to automate most of their trading strategies and improves their chances of success by removing the need to make emotional decisions about their trades.
Another tool traders use is virtual private servers. A VPS is a virtual private server, but in simple terms, it’s a virtual computer that you can access from your local computer.
These private servers are offered by several companies that will give you an allocated computer for a fee and can execute trades faster than regular phones and are less susceptible to slippages.
Technology has lowered the costs of trading. In the past, traders would have to pay commissions to brokers to trade. However, with online trading, there are no commission fees. This is because you are not using a broker to execute your trade and can therefore save money by trading online using your home computer.
Lastly, technology has increased transparency in the markets. In the past, information was not readily available to traders. As a result, it was difficult to make informed trading decisions. Nowadays, you can get access to real-time market data and decide to go long or short based on the current market conditions.
Ultimately, technology has improved the way we engage with the financial markets. Make sure you find creative ways to take advantage of these tools and improve your trading results today.