Forex trading evolved amazingly in the last 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 have an idea about the changes and the evolution in the Forex market lately, you should consider the EURUSD rate. Some eight years ago, the biggest Forex brokerages offered the EURUSD quote on a four-digit account with three pips spread. It meant that the spread between the bid and ask prices was three 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 on some brokers. As you can see, the distance traveled and the leap forward is stunning. And this happened in just a few years.
What is Mobile Forex Trading
Technological developments made the Forex market change for good. Not only the Forex market witnessed transformational changes, but also the way retail trading is being done. These changes started at the broker’s end, with new technologies like ECN (Electronic Communication Network) and STP (Straight Trough Processing) that made spreads fall drastically and execution improved as well. But the ease of trading is significant at the retail trader’s end as well. 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 once that smartphones and tablets were embraced so quickly. The changes were happening 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 is here only from a few years ago. What traders are doing is making their technical analysis on their desktop, but trading is done from a smartphone.
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Advantages of Mobile Forex Trading
By far, the biggest benefit is the ease of access to a trading account. Mobile gives access to the Internet even when there is not an 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 the screens. Not anymore! Smartphones changed the life of a Forex trader. 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 only the analysis is being done on the desktop and then the market monitoring is happening with the help of smartphones. It means Forex traders are more active and this is possible only because of mobile trading. The actual trade execution is improved as well on mobile trading platforms and recently trend indicators and oscillators are being introduced as well. This has the effect of reducing the dependency of analyzing big charts, but not for all types of traders. Traders that use oscillators and trend indicators as the only thing for entering and exiting a trade are delighted with these features. But traders that 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, the analysis once was done, monitoring can be done on smartphones apps. MetaTrader, the most popular trading platform in the world, developed a mobile app that can be used both on smartphones and tablets. It is so good that one can login with credentials from any broker that offers the MetaTrader as a trading solution. In other words, there’s no need to install an app for all the brokers you have an account with, but only install the MetaTrader app, and then into that app, multiple accounts can be used. This seems to be only the beginning as, again, brokers are striving the close the gap between technological advances and retail customers access to those advances.
Disadvantages of Mobile Forex Trading
Having access all the time to the trading account is both a blessing and a curse for the retail traders. Trading has a psychological component that many ignore and great traders can go busted only because of greed and fear, things that do not necessarily relate with a trading setup 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. Only 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 to 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 are making money regardless if 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 one overtrades an account, the Forex broker will earn more on commissions as trading activity is increasing. This is the result of mobile Forex trading and a net consequence of it. But brokers need to be careful as a trader that blows up an account is not an active one as the risk is that the account will not be funded anymore. In other words, 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 increased 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 some up, mobile trading is a blessing for both brokers and traders, and one could 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.
Recommended Further Readings
- Forex Trading – Explaining the Concept
– What is forex trading, generalities about trading the currency market. - Why Trading Forex?
– Advantages and disadvantages of trading the currency market, what are trader’s expectations and what is a realistic approach to follow - What is a Forex Broker and Types of Brokerage houses
– Explaining what a Forex broker is and does, how the business should be organized, and how many types of Forex brokers exist. - Financial Products to Trade
– Different categories of financial products that a Forex Broker is offering for the retail clients, starting with the classical currency pairs, and continuing with commodities, CFD’s, indexes, etc. - Forex Trading Sessions and Their Importance
– Explaining the differences between the three Forex trading sessions, what are their importance, ranking, etc. - Forex Brokers Types – ECN or STP?
– What is ECN, STP, how d- brokers deal with client’s orders, advantages, and disadvantages of the tw- types.
Other Educational Materials
- “Mobile trading experiences and the endogenous trading signal system.” Kuang-Hsun, Shih. African Journal of Business Management 4, no. 2 (2010): 282.
- “The perceived valuation factors for mobile trading services.” Shih, Kuang-Hsun. International Journal of Mobile Communications 8, no. 6 (2010): 689-707.
