Forex Trading and the Impact of Technology

September 30, 2010 – Technology has had a huge impact on the forex trading industry.  The advancement of the internet and software technology has made a significant imprint on this financial market.  Here are some of those ways it has made itself known.

The Internet

The forex market is the largest financial market in the world with a trading volume of around $4 trillion a day.  This gigantic market used to be only accessible to the large financial institutions and traders.

The closest individual retail traders use to be able to get to the forex market was the futures market.  Spot trading in this market was reserved only for the big investment houses.  Now a small day trader can develop his own forex trading strategies and trade spots.

Trading Platforms and Software

For most traders, their trading platforms and software packages are like their right arm.  They absolutely need it to trade the market efficiently and successfully.  These trading platforms used to be only accessible to large investment banks and hedge funds.

The same goes for trading software that tells you when you should trade.  These software packages allow you to quickly and easily do technical analysis and do chart pattern analysis.  Retail traders used to have to do this kind of analysis on paper.

Automatic Trading Software

There is even software that let’s you do automatic trading.  You can tell the software package which forex indicators to use to trade.  This allows you to trade without letting your emotions interfere.  It keeps you to your trading plan and trade automatically.

These automatic software packages used to be custom platforms that you needed millions of dollars to build.  Now you can get it online for as low as $60-100.  Something that was only available for the rich is now available to the average investor.

Technology has leveled the playing field.  Now, what was only available to large hedge funds and investment banks are now available for the average day trader. Not only has it made spot trading more accessible, it has made it more popular among retail traders.

 

 

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