No person or sector is immune from the march of technological progress these days. Everything from getting around cities to communicating with each other has been transformed by tech.
Trading financial instruments has also been changed as a result of tech. Now, we see faster trading speeds, new instrument formats and even easier broker selection processes all on offer. Hence, this is an industry that has been well and truly transformed.
Moreover, technology’s main impact on the trading world is perhaps the rise in fast speeds. Now, it’s possible for most traders around the world to get a new investment position open in just a few seconds.
Additionally, the system lag (or time delays) between clicking “Open” and the position actually opening are tiny. Hence, the risk of a sudden market change impacting your investment is also lower. In the past, this sort of latency could cause big problems if the message came through late!
Furthermore, the speed of your Internet connection (and the consequent speed with which you can trade) does, however, depend in large part on where in the world you are. Singapore, for example, has some of the world’s highest Internet download speeds. Hence, traders based there probably have fewer problems when it comes to time lags than people in countries with less well-developed infrastructure.
Rise of the CFD
Technology may have made things a little speedier for those who use traditional investment instruments. However, tech has also brought all-new instruments to the table. One of these is the “contract for difference”, or CFD, which has been truly popularized by the web and is now a mainstay of many online trading platforms.
Furthermore, these derivative products could be worth considering as alternatives to typical instruments. These range from the leverage function they have to the ease with which they can be accessed. They come with plenty of advantages.
It’s also worth considering the impact of the web on the range of broker choice available to traders. It’s a commonly held theory that the Internet has led to increased options in everything from what takeaway food to order to where to go on holiday, and to some extent, this is undeniably true.
A quick broker comparison reveals that there are plenty of brokers to pick from, and the Internet is certainly in part responsible for this development.
However, this was the case before the web too: brokers have always competed for trader attention, whether that’s been through placing newspaper advertisements or listings in the specialist press. Also, the Internet, then, is a great tool for speeding up the process of trader choice. However, that variety has, to be fair, largely always been there.
Technology has touched so many aspects of modern society. Trading is no exception. Also, this is an industry that has changed substantially in recent years.
All in all, from the pinpoint time accuracy with which trading positions can be opened and closed to the alternative investment vehicles. This includes CFDs – that now exist, tech has had a profound effect on the trading world.