We are living in the time when the technology is progressing faster than we are able to comprehend. The IT sector has changed the way we communicate with each other, the way we learn, and the way we handle our money. Trading has always been a fuel of the progress. The first sailor men that boarded a ship actually carried some goods with them, so they can exchange them for the other goods that are available elsewhere. Today we are going to take a look at these two concepts, trading and technologies, and see how online trading looks today.
What is the largest financial market?
Most of the people believe that the stock market is the largest financial market in the world. The reality is quite different than that. Currency market, also known as the Foreign Exchange, will dwarf any stock exchange or even all of the stock exchanges combined. Throughout the years this market has only been accessible by the large corporations, governments, banks, and various institutional investors. However, around 25 years ago the market has opened its doors to the retail investors. And, as this is the world’s largest financial market, it also tends to be the most technologically advanced.
A quick history of retail FX technologies
Trading currencies online has not become possible overnight. Even though the main factor behind it was the change in the regulation, it still required some companies to act as an intermediary – commonly known as a broker. The first retail FX brokers started to appear in early 90’s and during those times it was quite a difficult business from the operating perspective. A company had to develop its own trading software, connect this software with the price feed of the counter parties, work out the depositing and withdrawing options and so on. Later, the FX market became much more mainstream as one of the major software companies has appeared – MetaQuotes. This company has been supplying the brokers with their own trading technology, and because of this, online trading became even more widespread.
Considering that a broker was no longer required to invest into their own trading software, the scope of brokerage company’s tasks has shrunk quite a lot. However, the main catalyst was the appearance of such software houses as Spotoption because they started providing full-scope solutions for the brokers. Instead of just supplying a trading software, Spot option started offering brokers a full suite of tools: Client Relationship Management software, money operations solutions, online trader’s room and many more. With such innovations, starting up an FX brokerage became even more accessible.
This way, a broker would only need to work out its sales, marketing and support in order to operate. And we can clearly see that this shift has been triggered by the practical application of the technology, especially in terms of the Software-as-a-Service apps.
How will online trading change in the next decade?
It is never easy to forecast the future, however, from the trends we see, we can identify that there are many financial scams and this is what holds back the whole sector. A few years ago a certain technology has been developed that helps keeping things fair and transparent – yes, we are talking about the blockchain. We can certainly forecast that the trading platform of the future will be powered by the blockchain. This way, a broker will always be fully transparent in terms of passing its orders to the market. Considering the recent legal updates (like MiFiD II) and the overall trend for the best execution policy, we can be sure that there is a place for the blockchain in trading.
Next to this, currently most of the trading platforms are compatible with the mobile devices. Yet things are about the change here too. Online trading platforms of the next decade will be designed in the mobile-first way. This means that a software developer will expect that most of its clients will be using the platform on a mobile device.
Finally, it is very easy to notice that things around us start looking simpler every day in terms of the design. This is another trend that we can forecast. Trading will no longer look complex, but it will look as something that can be understood by a teenager.