Technology has affected trading in monumental ways. Trading as we know it today is a product of the financial market’s technological innovations. Examples of the influence of technology on the trading industry include electronic trading platforms, automated trading, and the rise in blockchain applications.
This article will examine how technology has changed trading, particularly for traders and retail investors. You can get more learning resources, such as the meaning of CFD trading, on the IQcent website.
Electronic Trading Platforms
Electronic trading platforms have become so popular that it is impossible to imagine a time when such platforms did not exist. However, decades ago, most trading activities were conducted manually or with analogue devices. Traders and investors had to be physically present at a trading house or send a representative in order to conduct many trading-related activities.
In recent years, there has been a surge in electronic trading platforms. These platforms offer trading services to both retail and institutional traders and investors. These platforms, such as IQCent, make it easy for anyone to access financial products on almost the same level as institutional investors.
This leveling has opened a wide range of opportunities for different players to come in. These include third-party services and app providers, educational centers, and copy traders. All of these were hitherto impossible before the advent of electronic trading platforms.
With the advent of intelligent computer systems, traders began to look for ways to automate their trades. This desire for automated trading led to the rise of algorithmic trading. This type of trading is becoming increasingly popular due to its consistent results, ease of use, and low setup requirements.
Algorithmic trading relies on predefined rules to generate and execute trades. They are popular among short to mid-term trading timeframes and can be applied to all trading strategies. Many algorithmic trading software is publicly available for a recurrent or one-time fee. Traders with programming expertise or funds can also create their own algorithmic trading software with custom trading rules.
Whether you use prebuilt algorithmic trading software or have one custom-made, you will get the key benefits of algorithmic trading: speed and efficiency. These tools analyze data faster and more accurately than humans, thereby providing faster reactions to market conditions and better execution of trades.
Artificial Intelligence and Machine Learning
When algorithmic trading appeared, it was a big deal for many traders and investors. But as the world turns its eyes to the broadscale application of artificial intelligence, traders are looking for ways to leverage AI capabilities in their trading strategies.
The edge that AI has over algorithmic trading is that it adapts to changing trends. Algorithmic Trading relies on predefined rules, and traders must constantly adjust the settings to get the most out of changing market conditions. AI, on the other hand, can be programmed to make these adjustments. This feature makes it far superior and valuable to traders.
Traders use AI for various functions, such as identifying market patterns, analyzing news and market data, and reviewing market sentiments. All these provide insights that help traders to predict market events. The application of AI goes beyond just making trades. It can also be used for risk management, fraud detection, and portfolio management.
Mobile trading has come a long way in recent years, from crude applications to fully functioning mobile trading centers. These mobile trading apps often have the full functionality you expect from a desktop-based application. For instance, MetaTrader 4, a popular trading platform, has mobile apps for Android and iOS devices. Traders can enjoy the same functionality on mobile apps as desktop and web-based applications.
The biggest beneficiaries of mobile trading are beginners and casual traders. With mobile trading apps, these traders can analyze market data and set up trades regardless of wherever they are. These apps also have user-friendly interfaces that make it easy for anyone to navigate and execute trades without third-party assistance.
As more people adopt trading as either a part-time or full-time vocation, there will be an increase in the number and quality of mobile trading apps. Brokers like IQCent offer powerful, simpler, and intuitive trading apps with comprehensive features that make them suitable for both beginners and advanced traders.
Blockchain technology has introduced a new asset class, cryptocurrencies, into the trading industry. Although support for crypto trading is not universal, many innovative brokers, such as IQCent, provide opportunities for traders to profit from the price movement of major cryptocurrencies.
Furthermore, the unique features of the blockchain, such as security and privacy, can also be applied in the trading industry. However, since blockchain technology is still in its early stages, many challenges remain to overcome before it achieves widespread adoption.
Technology has profoundly impacted trading, providing traders with new opportunities and tools for analyzing the market and executing trades. These innovative technologies will likely shape the future of trading.