“ Data Access, Predictive Analytics, and Machine Learning will drive investment innovation”

— Zhi-Ying Ng, Forrester

FinTech opened up new horizons for regular people with no experience in the financial markets to easily access the investment world. Individuals can explore investment platforms and establish trading accounts with less hassle and a more simplified process. In addition, FinTech allowed highly effective tools and easy-to-use analysis to assist regular investors to execute trades and managing their portfolios. In context, FinTech technologies managed to combine several components of the financial services in one place. With the highly advanced technology, FinTech is able to play several roles in one single app or platform which provided a major leap in online trading and investment solutions. Here are a few other benefits it brings about.

• Do-it-yourself-online mentality — From flight tickets to insurance, consumers prefer to monitor and source the best deals online. Retail traders have also expressed interest in online platforms that source trading strategies and tools that help them analyze potential trading opportunities. The real-time data allows traders to create solid strategies based on their goals.

• Changes to pension schemes — Fintech has impacted pension schemes around the world, such as the shift from defined benefits to defined contributions, which puts more investment capital into the hands of retail investors who need to balance short-term and long-term goals.

• Rise of cloud and fast computing — An increasing amount of computing power is now available on the cloud, so retail traders can gain access to more sophisticated tools.

• Artificial intelligence and machine learning — Machine learning and AI are powerful tools for analyzing data, and trends, and combining different sources of information in order to better understand and make decisions about markets. This offers new opportunities to traders from the new generation. Read Millennials and Gen Z: How the New Generation Invest？

• Analytics and monitoring — Big data and visualization tools allow traders to analyze their portfolios more easily, and monitor them in real-time.

As FinTech grows, its impact on trading will also grow, so experts anticipate an even higher increase in young investors. So, as we can see FinTech is changing the world we manage money and how we invest. Online trading is one of the key areas in that FinTech has evolved and advanced over the last few years.

The Role Of Technology in Forex Trading

Technology has become deeply ingrained into Forex in so many ways. Most newcomers to the world of online trading will not notice this, but those who have been in the game for much longer are sure to be aware of the changes they have seen over the years.

Technology and Forex have evolved in parallel, and as a result, millions of ordinary people are now able to access a previously elite way of trading.

Forex trading uses almost all aspects of financial technology, from account management and transactional technology to reporting and analytics. As it has developed, it has incorporated banking and other financial technology to offer its customers new possibilities, making trading easier, and luring in new traders who have an interest in forex but lack time to learn complex analysis or find it elsewhere.

How Technology Impacted the Forex Trading Apps & Platforms

If financial technology hadn‘t emerged, forex trading would still be confined to a small group of people: tycoons, yuppies, investment bankers, and a few prominent figures on Wall Street. Thanks to technology, today’s traders can trade a wide variety of currencies quickly and easily from the comfort of their homes and benefit from faster order executions, secure payment methods, better market analytics, as well as a forum for safer trading.

Here are some examples of how technology has transformed and will continue to transform the Forex trading apps and platforms.

1. Ease of Registration & Speed of Verification

Automation of the Forex landscape has made it possible for beginners to get started with Forex trading since it enables easy registration where digital documents are automatically reviewed and verified by an automated system, all within a very short timeframe. You can now open a forex account with simple steps, and you wont have to go through tedious verification procedures anymore.

2. Improved Trading Tools

The advancement of technology has also made Forex trading more accessible by reducing the complexity of trading tools. Trade management tools are designed to maximize the effectiveness of a traders strategy. Forex tools and platforms enable real-time transactions, preventing latencies in foreign exchange buying and selling. Furthermore, trading apps ensure that traders have access to their accounts from anywhere and can trade Forex currencies on the go.

3. Enhanced Transaction Speed

The growth in algorithmic trading in forex over the last few years has largely reduced the time needed to complete Forex transactions by automating certain processes. In addition to producing efficiency, automation lowers the cost of carrying out these processes, such as the execution of trade orders. This automatic execution of trading orders and transactions has proven to be significantly more efficient than manual execution.

4. More Accurate Live Market Prices

Trading forex requires quick access to real-time prices and information, which can help traders make more accurate predictions about the market and minimize risks. Thanks to technology and automation, people now have access to more information and more accurate live market prices, which allows them to stay on top of the latest news and trends affecting the forex market and make smart trading decisions.

5. Automated Analysis

Automated forex trading software follows multiple market timeframes and analyzes data charts to determine currency price trends. This advancement in the Forex market uses machine learning technology to make it possible to forecast trading signals — for example, spread discrepancies, price trends, and news that impacts the market — to make a profit on currency pair trades.

6. Quick Forex Transactions

A potential solution to the growing consumer demand for transparency and efficiency in Forex transactions is now possible with the help of fintech enhancements, and it is transforming the Forex sector completely. Forex transactions, including deposits and withdrawals, became much simpler and quicker with automated technologies. These technologies also made a variety of payment modes possible.

7. Evolving Workflows

The advancement of trading technologies reduces the burden of value-added activities such as data retrieval. With the increase in artificial intelligence (AI), machine learning (ML), and natural language processing (NLP), workflows are simplified, allowing for faster, more accurate, and more accurate decision-making in forex trading.

It is believed that the integration of Technology and Forex trading is similar to what scientists call mutual symbiosis. Demo accounts are also a result of Fintech, as they mimic the actual machinations of the forex market, giving all parties a chance to become acquainted with the system before investing in real money.

Growth of Forex Algorithmic Trading Strategies

The introduction of algorithmic trading is another significant transformation technology brings to the world of Forex trading. Algorithmic trading involves executing orders using pre-programmed and automated instructions that account for variables such as price, volume, and timing. It combines complex formulas with mathematical models and human oversight to determine when to buy or sell currency pairs on the exchange.

The Automation Revolution

The Forex trading industry has seen a massive impact of algorithmic automation on various levels. Automation has transformed what was a transaction-intensive, back-office operation into something that is now a fully automated back-office operation.

“Automated trading allows you to walk away and watch the strategies work, eliminating some of the emotional lead we have seen in the past.”

Automated algorithmic trading has completely transformed the trading landscape. Most traders use automated trading to some extent without realizing it. The reason for this is that most trading platforms now offer a variety of order types that can be pre-set and triggered automatically when conditions are met. Stop-loss and Take-profit orders can now be placed almost entirely automatically without any trade intervention.

Forex Algorithmic Trading Strategies

The following are some common forex algorithmic trading strategies and some additional ways of using algorithms to achieve automated trading.

• Statistical — Statistical refers to an algorithmic strategy that analyzes historical data for trading opportunities based on statistical analysis. By comparing historical trends with current market data and trends, profitable trading opportunities can then be identified.

• Auto-Hedging — As the name implies, it is a strategy which performs hedging automatically. Essentially, once a trade is placed, a second trade is executed to hedge the first trade. The main aim is to reduce a trader‘s exposure to risk. As a result, it could help balance a portfolio’s exposure across different currency pairs.

• Forex scalping — The Forex scalping strategy involves traders trying to capitalize on small price changes which may occur within a few seconds. The use of algorithms might be particularly appropriate for this type of trading as it involves opening a large number of trades per day, whereas manual trading may result in a slower execution time.

• Direct market access — This refers to the optimal speeds and lower prices at which algorithmic traders can access and connect to multiple trading platforms. It is typically used by buy-side firms. DMA allows buy-side firms to trade without relying on market makers and broker-dealers.

• Trend strategy — Forex trend trading strategy involves trading based on the current price trend — i.e. buying when the asset is in an uptrend or selling when the asset is in a downward trend.

• Momentum trading — Momentum trading is another popular short-term Forex trading strategy. The general rule for trend traders is to buy low and sell high, whereas momentum traders “buy high and sell higher”. For example, EUR/USD is approaching a significant level of resistance at 1.20, If the pair breaks through that level, momentum will build as traders anticipate the trend will continue.

• News trading — You may have noticed that during central bank meetings and major news releases, volatility jumps significantly and prices move abruptly. During this time, very little manual trading occurs as most institutional traders use algorithms for such events.

Algorithmic trading includes high-frequency trading, characterized by the extremely fast rate of trade order execution. Traders can benefit from high-frequency trading by making trades within milliseconds of incremental price changes. As a result, traders can act with greater precision and speed than with manual trading methods.

Original Article: How Fintech Revolutionized the Forex Trading Landscape

Disclaimer: This post is from Aximdaily and it is considered a marketing publication and does not constitute investment advice or research. Its content represents the general views of our editors and does not consider individual readers personal circumstances, investment experience, or current financial situation.