Benefits of Mobile Forex Trading

Forex trading has evolved amazingly in the last few years due to massive technological advances. In less than two decades, what seemed impossible became possible, and retail traders gained access to the largest market in the world. This was possible because of the online environment that allowed anyone with an Internet connection to open a trading account with a broker and place trades on the Forex market. Such a thing was inconceivable a few years back. To get an idea about the changes and the evolution in the Forex market lately, you should consider the EUR/USD rate. Some 8 years ago, the biggest Forex brokerages offered the EUR/USD quote on a four-digit account with a 3-pips spread. This meant that the spread between the bid and ask prices was 3 pips, something that seems out of this world these days. Today, for the same currency pair, on a five-digit account, the spread is 0.2 pips, or even less with some brokers. As you can see, the distance travelled and the leap forward is stunning – and this happened in just a few years!

What is Mobile Forex Trading?

Technological developments changed the Forex market for good. Not only did the Forex market witness transformational changes, but also changes in the way retail trading was being done. These changes started at the brokers’ end, with new technologies such as Electronic Communication Network (ECN) and Straight Trough Processing (STP), which made spreads fall drastically, and led to improved execution as well. The ease of trading is also significant at the retail trader’s end. When opening a trading account with a Forex broker, retail traders gain access to their account on multiple levels: desktop, smartphone, and tablets. Trading on the go has become popular since smartphones and tablets were embraced so quickly. The changes happened so fast that many brokers were taken by surprise and needed to adapt to the new reality. The biggest challenge was to keep the pace with the mobile market. Nowadays mobile trading is taken for granted, but it only appeared a few years ago. What traders are doing is performing their technical analysis on their desktop, but doing their trading from a smartphone.

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Advantages of Mobile Forex Trading

mobile smartphone tradingBy far the biggest benefit  of mobile is the ease of access to a trading account. A mobile gives access to the Internet even when there is no Internet line available, as 3G and 4G technologies allow one to navigate easily. This was not possible with a simple Internet landline, as the Forex traders were simply “glued” to their screens. Not anymore, though! Smartphones changed the lives of Forex traders. These are not big words, but the pure reality. Because of smartphones and mobile trading, the Forex trader became mobile as well. Instead of spending endless hours in front of the trading screens, now it’s only the analysis that is being done on the desktop, and then the market monitoring happens with the help of smartphones. It means that Forex traders are more active, and this is possible only because of mobile trading. The actual trade execution is also improved on mobile trading platforms, and recently trend indicators and oscillators have been introduced as well. This has the effect of reducing the dependency on analysing big charts, although not for all types of traders. Traders who use oscillators and trend indicators as the only thing for entering and exiting a trade are delighted with these features; but traders who use Elliott Waves theory, or any other trading theory that requires a top-down analysis and a systemic approach to trading, are not that lucky. Nevertheless, once the analysis is done, monitoring can be done on smartphones apps.

MetaTrader, the most popular trading platform in the world, has developed a mobile app that can be used both on smartphones and tablets. It is so good that one can log in with credentials from any broker that offers the MetaTrader as a trading solution. In other words, there’s no need to instal an app for all the brokers you have an account with, but only to instal the MetaTrader app; and then multiple accounts can be used within that app. This seems to be only the beginning, as again brokers are striving to close the gap between technological advances and retail customers’ access to those advances.

Disadvantages of Mobile Forex Trading

Having full-time access to the trading account is both a blessing and a curse for retail traders. Trading has a psychological component that many ignore, and great traders can go bust purely because of greed and fear: things that do not necessarily relate to a trading set-up or rationale. Forex markets spend most of the time in consolidation, and some traders, due to human nature, feel the need to be in the market all the time. Just because the market is open doesn’t mean one needs to take a trade. This leads to overtrading, and overtrading leads to higher risks. In turn, the account is exposed, and a margin call will come sooner rather than later.

Overtrading is the biggest enemy of Forex traders, and this is especially true now that mobile Forex trading is a reality. However, there’s someone who is happy about this: the Forex broker. Brokers make money regardless of whether the retail trader is profitable or not. They charge a commission for every single trade, profitable or not, and a fee in the form of spreads. Therefore, if a trader overtrades an account, the Forex broker will earn more on commissions, as trading activity has increased. This is the result of mobile Forex trading, and a net consequence of it. Brokers need to be careful though, as a trader who blows up an account is not an active one, and the risk is that the account will not be funded anymore. So the real aim of a broker is to make sure the trader is active, as only active customers will bring commissions on a day-to-day basis.

Scalpers are the perfect clients for Forex brokers due to the large number of trades they take on any single day. Mobile trading allows scalpers to be even more active than before, and scalping strategies and techniques to be tested under every possible condition. To sum up, mobile trading is a blessing for both brokers and traders, and one can only imagine what the future will bring. It is hard to conceive better trading conditions for the retail trader, but we should never underestimate the importance of new technological breakthroughs.

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