Just as it is in other sectors, technology is transforming the international forex market. And it is continuing to do so – always searching for newer, quicker, and better ways of doing things. With new solutions and services coming online, the effects are clear to see. Daily trading volumes hit record highs in 2019, with the Bank for International Settlements revealing that global currency turnover stood at $6.6 trillion. This represents a 29% increase in volumes reported in 2016.
With this integration of technology, both sides of the global forex market – buyers and sellers – are benefiting. More data, dynamic pricing, and the greater flow of information are outcomes of the tech influence. But there are also more profound changes that are brought about with tech.
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Online, on-the-move accessibility
Forex, like other commodities and instruments, used to be the reserve of the trading floors and exchanged with defined hours. And it was seen as something only those in-the-know were seen doing. But tech has changed that and dramatically so. Now, the markets are open 24/7 – albeit split across the day to cater for the different time zones in which the major financial hubs are.
The outcome is a democratization of the forex market – with online trading platforms now opening up the markets to more people. This leverages the broader trend of bringing fixed or mobile internet access to the masses. In the UK, for example, 87% of households enjoyed at least some form of online access in 2019. And efforts go on to bring connectivity to everyone.
Faster connectivity for more fluid market moves
The next step in this revolution is the advent of 5G technology. Already, new and existing forex traders can access pricing changes and market movement from apps on the move. That can be done anywhere on the planet too – not requiring a fixed connection or complex software. When the moment of execution can make all the difference, what will 5G mean for connected traders?
Much of the hype surrounding 5G connectivity is the speed it promises. For traders, though, the next-gen wireless network could also deliver two other critical benefits: lower latency and more bandwidth. In real terms, this could ensure the server receives a trading decision without delay – with the network also able to handle more requests, particularly in crowded environments.
Driving forward to the next tech ‘moment’?
5G tech is already bringing benefits to the international forex market. And it is the evolution of tech that we are already familiar with. But what about the next step-change? Is there about to be a ‘moment’ that can be compared to the advent of the internet? Or are traders simply going to see an ongoing series of refinements and advances to the solutions now in place?
Artificial intelligence (AI) has long been lauded as the next great step forward in technology. It is already used across sectors for the better. And forex trading is no different. Traders can now use automated systems to better inform their decisions based on the analytics available. Nikkei has even used AI to predict patterns in the US Dollar-Japanese Yen rate.
Is this the next advance that further revolutionizes the global forex market? As a sector that is showing itself to be receptive to change and transformation, it is surely not too long before the tech solutions of tomorrow are influencing the forex trading strategies of today.