Forex trading, or foreign exchange trading as it is otherwise addressed, has emerged as the widely expanded market in finance in the past decade. In short, it’s the currency trading method; for instance, purchasing Indian Rupees using US Dollars is one such forex trade. Trading currency always happens in pairs, and forex has become vital to the global economy. One among the handful of undebatable reasons which favor its accomplishment to this pinnacle is the implementation of various technologies that have evolved over time. The technologies implemented are cumulatively innovative, interconnected, and advanced, yielding a high profit, without which the functioning of the forex market would turn to be inefficient and unprofitable.
Technology has indeed revolutionized the entire forex market realm such that transactions are made accessible to the trader, no matter to which part of the world he travels, while still able to carry out his forex transactions on the go, without any hindrances. Apart from the advanced trading platforms and the multitude of forex tools, acquaintance with comparatively better technologies like automated programs and trading bots has significantly lightened the burden on forex traders’ shoulders such that they have come to a juncture wherein they aren’t in a state to operate in their absence.
However, for an in-depth understanding of the technology implemented to enhance forex trading as a foreign trader in the US and to be aware of the benefits, risks, and challenges associated, please go ahead reading this article. This article also highlights the best practices to be adhered to for leveraging technology in forex trading.
Boon of Employing Technology in Forex Trading Realm
Technologies flow in connectivity by making the investors’ dream of opening and closing more than one position in real-time a possible phenomenon. This, in turn, increases the efficiency of the forex trader to an admirably greater extent. With the advent of Artificial Intelligence (AI) and Machine Learning (ML) technologies in the forex market, analyzing a multitude of market information and identifying suggested directions and methodologies to suggest good decisions in trading becomes a cakewalk. Moreover, the 5G technology, which is yet to be implemented, will undoubtedly reduce the response time required to ping servers, permitting traders to open and close positions even faster.
Altogether, it has also assisted the forex market in attaining its present value range. The prime advantage of using mobile network technology and smartphone mobile apps is the ability of a forex trader to be involved in forex trading uninterrupted, despite traveling even to the most remote locality of the world. Technology has indeed positively brought the aspect of people accessing information a lot easier; it is now possible for them to be well informed about the current affairs influencing the forex market, based on which they could arrive at fair decisions.
Also, with the blooming of internet technology, forex markets can be accessed with just a click from any remote locality! Those forex trading markets implementing the ‘point and click’ algorithmic method are readily offered the easily usable interface through which forex trades are accomplished successfully without human intervention. While going for algorithmic trading technology, a collection of instructions is written in an algorithm per the trader’s requirement. Hundreds of such algorithms can be operated at the same instance to cover a wide range of strategies at the same point in time. The results are remarkably beyond boundaries as algorithms work based on the information and override decisions based on emotions.
Backtesting is an easier task with employing algorithms and assists in building up stability. The cloud computing technology, which is comparatively new, and despite bearing a voluminous impact across trading companies, permits the remote usage of trading platforms and related tools without the necessity for employing costly software and hardware installations.`Being an active user of social media apps, a forex trader nurtures his analytical cum trading expertise as he finds room to imbibe more information on financial markets effectively.
Challenges and Risks Encountered while Using Forex Trading Technology
Any technology implemented has its risks and challenges to be addressed. This section of this article discusses the same. Based on the choice of the trading platform, the related trade order might dwell within the computer and not on the server. If there is an interruption in internet connectivity or unexpected power failure, the order placed might not be complete, resulting in undesired discrepancies.
Technical risks are often caused while algorithms are employed. General information is being fed to these algorithms as a prerequisite to using the technology. Still, the irony is that the technology can’t authenticate the information provided as its input. Sadly, the usage of false data ends up encountering risks with greater intensity.
Yet another risk encountered with algorithms pertains to the unbalanced scenario in the trading potential of forex market traders. When some are tagged as the best forex broker, the USA has the providence to enforce the usage of advanced technology to gather data and accomplish tasks at a faster rate than the others; the imbalance caused, as a result, might end up in fragmentation among the market, along with shortages in liquidity over a considerable duration. Also, there are ample chances for algorithms to crash or not respond when there is an unprecedented rapid change in the market scenario because they are programmed only for predetermined forex market scenarios.
Forex transactions carried out even through the best forex broker USA by virtualization, digitalization, cloud services, or some other means might conceal the traders’ credentials and patterns exhibiting their behavior, which subsequently leads to illicit access to information on investment, invading their privacy, to the extent of even disclosing sensual information, by making use of the technical loopholes. Cyber threats caused by malware and virus attacks severely impact forex trading, disturbing login credentials and other stored trading information. Using weak passwords, personal laptops or mobiles holding sensitive data, or observing less concern in following existing security norms, aid to cyber threats caused by human error.
To address the algorithmic risks encountered in unprecedented situations, markets ought to be constantly monitored, and the involved algorithmic programs must be immediately suspended to evade the consequences.
Thorough monitoring is mandatory to mitigate the discrepancies arising from power failure or internet disconnectivity. In addition, a battery-operated automatic power supply switchover system maintained in good condition will reduce the confusions that result in placing orders with errors. Threats caused by cyber crimes can be curbed by implementing the entire cyber security methods. It is essential to deal with such breaches with utmost care as it poses a severe threat to protecting sensitive data and digital information from the reach of potential hackers. It also damages the authenticity of those known as the best forex broker in the USA.
Using strong passwords with memorable characters, refraining from clicking on dubious links or downloading email attachments from unauthorized senders, and providing extra attention while feeding personal details on websites, are some of the best practices to keep a forex trader from being trapped by cyber security threats. Moreover, the best forex broker USA when forex trading also guards traders against cyber attacks by incorporating strict, efficient security checks like firewalls, various advanced encryption technologies, and periodic updates in software used.
Best Practices to be Adhered for Leveraging Technology in Forex Trading
Prevention is better than cure, says an adage. This is indeed much applicable in forex trading as well. Rather than weeping over spilled milk, it is wise to hold it with care without spilling. Here are a few best practices to keep forex traders inaccessible to the damages caused by various risks and challenges associated with leveraging technology in forex trading.
- We ensure the software is regularly updated manually or automatically through protected confidential links from tested authentic software providers.
- Employing a Zero Trust approach, privileges to hold an account are limited only to those whose intervention is mandatory. Care must be taken to follow the documented steps to reset credentials securely.
- Enforcing the usage of secure boot in your operating system, this feature permits only a specific software to boot the system.
- Formulating a qualified disaster recovery plan to mitigate cyber-attacks. Constant review and updations of the recovery plan must be taken care of.
- Monitoring and keeping a list of inventories – network devices and software installed and regularly cleaning up any undesirable ones.
- Keeping all hardware devices serviced at the right time to function without troubles.
- Regulating traffic, restricting content flow by separating critical services and networks, and stationing the right network defense practices.
- Employing reputed cyber threat mitigation services with a broader perspective of threats encountered globally and providing remedies.
- Enforcing the implementation of multiple-level user authentication like passwords, face recognitions, PINs, fingerprint authentication, and security questions.
- Ensuring the vendors, clients, third-party service providers, suppliers, and partners forced to access the sensitive user and market data undergo frequent security and authentication checks.
- Keeping a check on insiders who tend to misuse their rights and access confidential details or download phishing emails. Ensure the insiders undergo periodic assessments, training camps, counseling sessions, and awareness programs.
Every nation has a different set of forex trading working. Sharing each others’ experiences, challenges, risks encountered, and the strategies employed to overcome them can be published on their websites or blogs and forums as a platform for forex traders from other parts of the world to have a glimpse and imbibe knowledge. Alternatively, interactive discussions and seminars or online Zoom meetings with the experts in the forex market industry can be held frequently to brainstorm on managing the evolving risks, handling critical situations, and upgrading the tactics to be practiced in employing emerging technologies in the forex market realm.
A couple of success stories are furnished here to boost your confidence.
George Soros, a Hungarian-born financier and philanthropist, popularly hailed as “the man who broke the bank of England,” is a unanimously renowned forex trader across the globe. He topped the forex trading ultimately by implementing the Soros Method, which works on the macroeconomic trading approach based on the reflexivity theory, which proposes that the market participants’ behavior influences the market prices.
Stanley Druckenmiller, a legendary forex market investor, was influenced by George Soros, the icon in forex trading, and implemented Soros’ trading pattern to be successful. Druckenmiller implemented the top-down approach as his trading strategy. He also confesses that the handful of fruitful conversations with Soros helped him imbibe many decisions. Soros’ potential to accept immense losses without any panic, when he trusted that the strategy he had just implemented was the best in the long run, attracted Druckenmiller to the core.
As a closing note, despite forex trading evolving to such great heights in recent days, it is undeniable that the implementation of various technological advancements has enabled overcoming the bottlenecks. However, it is to be admitted that risks and challenges are inevitable, as in the case of any successful trade. But what makes forex trading an outstanding one is the adherence to best practices put across by those who have been successful in this domain and are frank enough to speak out about their experiences in public forums and personal interviews on social media. Undoubtedly, it is now mandatory to implement technological advancements in forex marketing.
Most assuredly, with the knowledge of the enormous success stories and the strategies and technologies they practiced, plunging into practicing their best practices isn’t a tough job. Ultimately, success is at the door. Strict adherence to the best practices put across by experts is indeed sheer guidance to becoming a renowned forex trader shortly.