Technology Changes The Way Of Investing In Forex
Forex, or what is the same, the currency exchange market, has been facilitating international trade since the times when communications were much slower than today, specifically since the Bretton Woods agreement unlinked the price of the dollar (world reserve currency) of the gold standard, since although currency exchanges were also carried out before, since the end of the gold standard the dollar exchange rate was no longer fixed. The US currency was now free to float freely compared to the rest of the international currencies, which was no small feat since the dollar is found in the most liquid pair exchanges.
Although this market was initially limited to a more professional area, in recent years, it has become increasingly accessible to the general public, so it is necessary to know not only how to do it but also the potential risks since, indeed, there are risks as well as potential opportunities.
Forex on mobile
The Internet and smartphones have been two of the most disruptive technologies of the twenty-first century, and thanks to this, connectivity between people around the world has increased in ways that no one could have foreseen, and in the same way, it allows everyone access to services that previously were either exclusive to professionals or required a very high effort on the part of amateur traders.
Now, this is no longer the case since anyone of legal age can trade forex as long as they have a cell phone that can connect to the Internet (it can also be done from the computer, and in fact, it is the most comfortable method for, among other things. , consult graphs and analysis) to be able to open a short or long position at any place and time, and this, of course, has risks, such as the investor not investing enough time in learning about the instruments It means doing leveraged trading and its risks, very different from a classic purchase and sale. However, many novice investors may be confused by believing that forex trading involves acquiring the currency, which is not the case.
For the rest, forex is a market well known to the most classic investors, probably along with the raw materials and stock markets. Still, it is usually the gateway for many first-time trading investors, perhaps because it handles concepts that most people are familiar with, which, thanks to technology, is very well complemented by the greater accessibility of tools such as the economic calendar, which helps to more efficiently manage information that affects the price of currencies, such as quarterly unemployment data, the CPI or a multitude of industrial indicators, to give just a few examples.
In addition, forex brokers can offer other instruments with which to trade on their platforms, which have their own characteristics and peculiarities.
Not only has the way of investing changed, but also the instruments.
Before 2009, cryptocurrencies did not exist, and today, only bitcoin is trading above $50,000 and capitalizes more than a trillion dollars. Of course, they have become another instrument for trading, although as already mentioned, they have particularities, such as that the level of leverage allowed on some platforms can be much lower since it is a very volatile asset and too high leverage would imply excessive risk even for the most experienced traders.
To understand what volatility entails, look at a bitcoin graph. If you look hard enough, you will be able to find instantaneous drops of thousands of dollars from time to time that may sometimes respond only to the action of a whale. So, a trader who had correctly predicted an uptrend and opened a long position would still see his position closed against, so it is very important to consider the level of leverage used.
Also Read : How Can Traders Use Technology To Improve Their Financial Performance?
