Although the beginnings of modern trading can be traced back to the 1970s, when the US allowed currency to move freely on the foreign exchange market, trading has changed significantly over the years, becoming more and more accessible. We already know that technology had been advancing at a rapid pace, revolutionizing every sector from healthcare to education, and finance hasn’t been an exception. Over the years, breakthroughs such as the Internet, smartphones, AI, and Big Data have made their mark on trading so that, even though its principles have stayed the same, the way it’s done has become almost unrecognizable compared to a few decades ago, when traders used to shout out orders.

From trading apps that allow anyone with a smartphone to grow their income to futurist trading bots that eliminate human error, here are the most exciting ways in which technology has impacted trading.

1.Smartphones have made online trading more accessible for everyone.

Do you remember the times when you needed a finance degree and at least ten years of experience in a financial institution to become a successful trader? Well, you probably don’t, but there was a time when trading wasn’t for everyone. Fortunately, that changed when smartphones became widespread.

According to the latest statistics, 3.5 billion people owned a smartphone in 2020, and this number is expected to grow even more in the following years. And every smartphone offers an opportunity for traders to analyze the market and execute trades. Nowadays, traders no longer have to be glued to their screens, and they can make decisions on the go. For types of trading such as daytrading, which is quite fast-paced and often involves purchasing and selling currencies multiple times per day, smartphones have made a huge difference. Besides, the availability of mobile trading apps has made it possible for everyone to give trading a try, lowering the barriers to entry.

2.Education and mentorship are now within your grasp.

Education and mentorship are key to trading success. Without them, your strategy is based entirely on randomness, and ultimately that leads to failure. In the past, acquiring this education wasn’t that easy. Most of the time, you needed to pursue finance as a major, enroll in a trading course, or have hands-on experience through your job. Depending on where you lived, resources may not have been widely available, which is why, for years, Forex trading was more concentrated in North America and Western Europe. Today, that’s no longer the case because education is everywhere, and it often comes at no cost. Forex trading brokers usually offer free guides, you can download free ebooks, or listen to podcasts about the state of the market. Even mentorship is easier to come by because you can get in touch with professional traders on social media, or, to be even safer, you can join social trading networks, which allow you to replicate the strategies of professional investors.

Thanks to technology, trading is not something reserved for corporate magnates. One study showed that the age of the average trader is 35-44, and 27% of traders are aged 18-34. What’s more, 72% of traders had no prior experience in finance, which goes to show just how much barriers have been lowered.

3.The rise of high-frequency trading

In the past, traders would shout orders at each other, which considerably slowed down the process. Now, thanks to computers, we have high-frequency trading, which enables us to execute trades in record time – up to 100% times faster compared to the 90s. This is especially beneficial to large financial institutions, which can carry out high-volume trading. This results in a more dynamic and exciting market and also creates a more competitive landscape.

Because technology advances at such a rapid pace, brokers are motivated to implement new features as soon as they come out, which creates better experiences for traders.

4.High accuracy and the reduction of human error

Any human activity is bound to be influenced by errors. That’s simply inevitable. And while trading can’t be 100% accurate because it’s influenced by personal biases and other psychological factors, it’s now more accurate than it was in the past.

First of all, you can monitor asset performance in real-time, and you can quickly fact-check information. This enables you to react quickly to the market and make decisions based on accurate data, not rumors.

Secondly, you can use digital tools to prevent losses. For example, you have stop-loss orders, which force you to sell an asset after it’s dropped below a certain minimum value.

And thirdly, digital tools can be more accurate than humans at predicting market trends and fluctuations. That doesn’t mean that you should leave the decisions entirely to them, but, if you’re a beginner, they can save you from many rushed decisions.

5.Automated trading systems – the most exciting application of tech in the trading world

And last but definitely not least, we have automated trading systems, which are perhaps the most exciting application of technology for traders. Also known as algorithmic trading, automated trading systems allow traders to establish a few rules for trade entries and exits, and then the trades are executed automatically, based on those rules. The potential of this technology is huge, especially for institutions. According to a recent report, automatic trading systems are responsible for up to 80% of the shares traded on the US stock exchange. Additionally, one study from global financial market reach company Refinitiv showed that 78% of traders believe that technology, through AI and machine learning, has boosted the efficiency of the financial market, and 80% plan on using automated systems in the future. The biggest advantage of automated trading systems is that they remove emotion from the picture and build discipline, helping traders stick to their strategies and avoid impulse moves. They also help reduce overtrading, which is one of the biggest causes of losses. With algorithmic trading, you can also diversify and employ various strategies at the same time, thus spreading the risk across several asset classes. Without technology, this is difficult and time-consuming to do.