What Are The Next Technological Steps for Digital Forex Trading?

What Are The Next Technological Steps for Digital Forex Trading?
What Are The Next Technological Steps for Digital Forex Trading?

Whilst it can be argued that the forex market was first born in 1971, the collapse of fixed currency rates and the Bretton Woods System two years later saw a significant sea change in the structure of the landscape.

In many ways, this ushered in the dawn of the forex market that we’re familar with today, and one that currently sees more than $5.3 trillion traded every single day globally.

The forex market has certainly evolved considerably since its rebirth 46 years ago, with digitisation and the rise of online trading changing it beyond all recognition. But what are the next steps that the market is likely to take? Consider the following:

  • The Rise of Self-Regulation

On May 25th, 2017, a coalition of central banks and high-profile currency market players launched an initiative that became known colloquially as the FX Global Code.

Featuring representatives from 16 global jurisdictions, this enterprise was established to clean up the forex market, following a number of rigging scandals and subsequent financial sanctions for some of the world’s most prominent banks.

Despite being met with some initial scepticism, the code has gained some considerable traction over the last few years. However, there’s still some considerable work to do in the space, with aspects such as ‘Last Look’ activity (which enables traders to hold off in a particular deal) causing potential slippage for clients waiting to be filled at the best possible price.

So, what’s next for the code? Interestingly, it’s likely to be augmented by a form of self-regulation in the months ahead, as whilst this would usually be anathema for brokerage firms, they’ve become increasingly accustomed to adhering to a specific code of conduct. This could really help to create a transparent and open marketplace, and one that boasts even higher levels of liquidity in the future.

  • The 5G Rollout

EE was the first mobile network to rollout 5G technology in the UK, with others set to follow suit in the summer.

Whilst many will argue that this is just another upgrade to a familiar technology, it’s fair to surmise that 5G will boast significant improvements to its predecessor, both in terms speed and the level of latency.

For example, 5G is likely to offer download speeds that are 20-times faster than what’s currently available, along with extremely low latency and reduced ping times (from 100ms to just 10ms).

This will allow for quicker and more efficient trading, with high-frequency traders likely to steal a significant competitive advantage by using this technology.

  • Forex Software will Become Ever More Abundant and Accurate

There’s no doubt that forex software and online trading platforms have become increasingly sophisticated in recent times, and this time is likely to become even more pronounced in the next 20 years.

As well as becoming more abundant, forex software will also evolve to boast greater levels of sophistication and accuracy.

At the same time, it will also become increasingly customisable, which will in turn enable novices to tap into the highly liquid and lucrative forex market with limited knowledge and understanding.

Some of the upcoming software releases will even be able to install themselves onto various devices, whilst the figures suggest that all forex trades will be completed electronically during the course of the next decade.

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