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How Technology has changed the way we trade forex

technology in forex

Technology is always evolving, and this change means better possibilities for more people. Better technology makes it easier for people to solve problems and by extension achieve their goals. Forex trading is no exception to this, thanks to faster and more reliable internet access, better trading platforms, more sophisticated software and online brokers. Forex trading is easier than ever.

This article highlights some of the ways technology has changed forex trading.

Easy of Access

Until the early 2000’s trading was mostly facilitated by and between large global companies, governments and banks. The lack of technology at the time and the fact that forex is intimately influenced by real-time events made it challenging for forex traders to take part in the forex market. Thanks to improved technology, forex trading is now possible for retail traders.

Technology has become streamlined, that is to say, that anyone, anywhere can now trade in real-time with prices streamed live. The only condition to this is access to the internet and internet is not only becoming faster but also more stable right across the world.

Speed of execution

Trades are now done electronically and it happens fast. Brokers are setting up their servers in the same data centres as liquidity providers and using fibre optic cables to achieve the best bandwidth possible. Furthermore, trading execution technologies such as electronic data communication network (ECN), Straight-through processing (STP) and direct market access require no dealing desk intervention, meaning trades are not delayed as they get checked by market makers.

Technology Has Increased Brokers Standards

Brokers are always looking for ways to gain an edge over their competition to attract new traders. One way they do this is by taking advantage of the technology available to lift their game and offer superior products.

Justin Grossbard of CompareForexBrokers explains that “if traders are not offering the latest technology, then they risk losing a client to new entrants to the market”. MetaTrader 4 for years was considered the gold standard in forex trading platforms (and it still is among the best) but as competition has improved and eaten into their market share, MetaQuotes have chosen to release an upgrade in MetaTrader 5. MetaTrader 5 comes with enhanced features to counter offerings from competitors including more charts, more indicators, 64-bit processing. As a result, more brokers are offering MetaTrader 5 in addition to MetaTrader 4.

More Competition

It is very easy to set up a website, and as a result, more and more brokers are popping up. These brokers are usually white label providers, meaning they are using another broker’s trading infrastructure. So while they will connect their clients to liquidity providers using the same infrastructure and spreads as the private label, white labels can actually offer better service through other features such as better software tools.

Previously, it was extremely difficult for smaller brokers to enter the market due to the high cost of the technology needed to connect to liquidity pools, technology has made it possible to leverage the infrastructure of resellers.

Automation with algorithms and social trading.

Trading doesn’t have to be manual. It can be done using algorithms or social trading to automate the trading. Automation has come a long way from being a specialist tool for those with programming skills to a tool versatile enough that people with little programming knowledge can use.

Whether you automate through algorithms or by utilising the skills of other social traders, the forex market is fast-changing so it helps to have tools to remove some of the manual processes. This allows traders to spend time doing other valuable things like researching the market or even spending time with family.

Puts Traders In Control Of Their Life

Last but not least, technology has allowed traders to own their life. As long as you have the internet, traders can trade anywhere at any time. Making forex trading one of the ultimate career choices or hobbies for a flexible lifestyle with lots of freedom.