If you think individual online retail trading looks different now than it did two decades ago when the idea first emerged, you ain’t seen nothing yet. While the basics of buying and selling financial instruments from regulated exchanges probably won’t have changed much, it would be to even begin to imagine the upheaval of change that the ever-quickening pace of technological evolution will bring with it. Even in today’s world, successful trading depends as much on high quality technology as anything. Don’t believe it? Keep reading and learn how, from broker to trader, frontend to backend, it’s all about the technology.
First of All, Communication
Unfortunately, things don’t always proceed without a hitch in the online world for the trader. Sorry, that’s just the way it is. With online trading, one should suspect there will eventually be mistakes or confusion that cost you money. In the old days, you’d just pick up the phone, dial your local broker, and bend his ear about the problem. But trading is no longer a local phenomenon. Your broker is liable to be halfway around the world, asleep in bed, and might even speak a different language. The first thing to look for when it comes to online trading is how many ways can you get in touch when there’s trouble? Does your broker have only a snail mail address posted listed way down at the bottom of the page where you have to scroll for five minutes to find it? That’s not a good sign. A credible brokerage should offer a variety of options – email for non-time sensitive questions and a 24/7 telephone line staffed with a live human being for critical issues. Real-time chat is something else to look for on the broker’s website. When the topic is your money, you want to be able to get in touch quickly.
The Fastest Computer on the Block
If all you do is check Facebook and play Candy Crush all day, there’s no great rush to have a fast computer. Other than your mental health, there’s nothing critical at stake when it decides to be slow. But when it comes to online trading, face it, you can’t afford to be mucking around with a bottom-end, el cheapo computer that still measures processor speed in megahertz. This is not to say you need to drop a few thousand bucks on your setup before heading online, but a few minutes dedicated to researching the qualities that make a computer faster and more reliable would be time well spent. No need to shoot for high-end but middle of the road would be a good starting place. The same goes if for trading done over mobile devices. You might be trucking along fine with that first generation iPhone as long as you don’t ask it to do anything more complex than dial Grandma or receive text messages. But when the goal is to leap into a market exchange and make a trade where profit or loss might be measured in milliseconds, you can’t risk futzing around with the equivalent of dial-up 56k Internet access. For those who have never experienced the slow motion torture of that connection speed, be glad for high-speed Internet. The bottom line is to try and stay within at least a few generations of being current if you’re trading mobile.
Screaming Fast Internet
The second part of the equation when it comes to online trading is the speed of your Internet connection. You can have the fastest computer in town, but all that power will come to a screeching halt if you don’t have online access to match. This is definitely a case of faster is better – always. If you’re in this game of trading for real, find the fastest connection option in your area and buy it. Successfully trading the market should allow you to pay the expense rather nicely. This is not to say that you can’t trade on a relatively slow satellite connection, but it’s a risk. Markets can tumble hundreds of points in moments. You need to have the ability to dump positions or take other protective actions almost instantaneously. How fast is fast? Before you can answer this question, assess what other members of the household might be doing while you’re trying to trade. Watching video eats up bandwidth like the cookie monster in a bakery and coming off a diet. Expect you’ll want at least a 10 Mbps connection, and since trading is a two-way street of flowing information, you need to be able to quickly send and receive data.
Cloud Trading With Multi-Platforms
For reference to anyone under 30, it used to be that any time you wanted to do anything other than basic computing, you had to either download and install the program on a desktop computer or buy the CD-ROM from a store, THEN take it home and install it. With the advent in recent years of mobile apps and cloud-based software, life has gotten more convenient for online traders. In fact, one of the features you should look for when choosing a brokerage is whether or not it offers multi-platform access to the market. The reality is that a daily trader might need to get into his or her account via alternate means from time to time. Here’s a scenario. You wake up in the morning and check the markets on your laptop in the bedroom. You like the bigger screen and reliability of having the trading platform installed on a local machine. You set a few trades in motion. Riding the train to work, the trading action is hot and heavy, so you open the SpotOption app on your iPhone and monitor developments, maybe even closing a trade to take profit. Your boss at work doesn’t mind if you take care of personal items now and then on company resources, so along about mid-morning, you log onto your broker’s platform installation in the cloud from your office computer and open another trade. See what happened there? In a single morning, you accessed the financial market of your choice via three different platform permutations: desktop, mobile, and cloud. There’s a lot of technology wrapped up in all these actions you probably take for granted. The ability to access market action lies at the heart of whether this is a profitable hobby or a losing proposition. The bottom line is that high-tech and online trading are inextricably entwined. To assure the profits continue to roll into your account requires what might seem to be an obsession with the latest and greatest in financial technology. When it comes down to it, you want your broker and other fintech partners in the delivery chain to have the same obsession.
Blockchain Security is Coming
Industry leaders like SpotOption have seen the future of database-powered platforms and it is called blockchain technology. This is cutting edge stuff, people. Blockchain is the underlying process and innovation that powers cryptocurrencies like Bitcoin. Invented in 2009 by a gent referring to himself as Satoshi Nakamoto, the idea of a decentralized, distributed database sits poised to explode on the financial industry like an atom bomb. More than a few experts believe blockchain technology will usher in the Age of the Unhackable Computer. Unhackable? That’s a mouthful but might be true given the current level of technology. Without delving too deeply into the machinations of exactly how it works, suffice it to say that the amount of computer resources that would need to be focused on corrupting even a single piece of information on a single computer in a blockchain network would be immense. And the thing is self-correcting, so that by the time a hacker made it in, the rest of the network would have automatically fixed it.
The Future of Trading
For all the reasons just stated and many more, it’s not ridiculous to presume that the future of online trading will be an entirely different beast than the one used today. Can you visualize it? Thanks to technology, the sheer amount of information flying at you will be enormous – too much for any human to sift through. With the specter of Artificial Intelligence (AI) looming ever larger on the horizon, can the day be far away when each trader creates an avatar, for lack of a better word, that constantly monitors the world’s financial markets in real time around the clock and makes trades for you based on pre-set parameters? This would be extreme automated trading. Don’t say I didn’t warn you.
Why this intense focus on technology? If you haven’t noticed already, trading is a competitive field. It’s a zero sum game in which, for one person to win (profit), another has to lose. While there is something to be said for strategy, discipline, and having an innate feel for the business, only a fool would deny the reality that high quality, new technology, like the one provided by SpotOption and other companies, that forever pushes the envelope of what is possible could be the x factor that moves one trader ahead of the a competitor.
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