The Impact of Technology on Forex Trading


There’s no doubt that the pace and rate of technological advancement in the forex market have accelerated markedly over the course of the last 30 years or more, following the emergence of screen trading.

From this point on, virtual trading platforms like the MetaTrader 4, Internet connectivity and (more recently) the emergence of 5G have revolutionised the forex market, triggering a number of benefits for investors of all shapes and sizes.

But how exactly has technology impacted forex trading? Here are some key examples to keep in mind:

#1. It Has Made the Market More Accessible

Let’s start with the basics; as technological advancement and the emergence of online trading platforms have made the forex market far more accessible to aspiring, novice and part-time investors.

This is borne out by the market’s daily trading volumes, which from a global perspective have increased from $5.1 trillion in 2016 to a whopping $6.6 trillion just three years later.

This trend is continuing at pace too, particularly with a rising number of young investors having entered the marketplace in the wake of Covid-19.

#2. It Has Increased Freedom and Flexibility for Traders

By being able to trade from a desktop or through a mobile app, modern-day investors can now operate with far greater freedom and flexibility as a whole.

This makes it easier to execute a high volume of orders in real-time, while enabling investors to target specific time-frames and trading sessions and peak periods of global market volatility.

This can, in turn, increase profitability, which is the underlying objective of any forex trader regardless of their wider strategy.

#3. It Has Created Superior Tools

The forex market has evolved outside of innovation and technology too, with today’s free-floating currency exchange rates far removed from the Gold Standard and Bretton Wood System used between the early 1900s and 1972.

Analysing these exchange rates in real-time can be notoriously challenging, however, but today’s investors can now access a vast and diverse range of analytical tools and technical indicators that lead to more informed decision-making.

There’s a variety of tools and indicators to suit different trading strategies too, which is especially important in the modern age.

#4. It Has Introduced the Concept of Social Media

While few thought that social media would evolve into the far-reaching and influential tool that it is today back in 2005, there’s no doubt that this medium is now widely used by investors in the world of forex.

Even outside the concept of social trading (where investors can follow and copy the strategies deployed by successful traders), social media provides real-time access to huge swathes of unstructured data, which can also be used to drive more informed decision-making. Social media is also a great source of financial and economic news from across the globe, from breaking stories to more detailed analytical pieces.

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