Online trading history can be traced back together with technological advancement.
Investors and traders have the financial market at their disposal. If you have the device and internet connectivity, you can access the decentralized market of online trading any time you deem best.
But what does the future hold for online traders?
Can the market sustain itself with continuous technological growth?
Read here our forecast for the future of online trading scene and learn the best way to maximize online trading advancements.
Table of Contents
Online Trading Trends of 2024
Race To Zero goes on (Commission-Free)
Many brokerage firms and financial services are in the race to zero when it comes to commission. And it attracts numerous traders, mainly those who trade in low volumes and look to cut costs.
However, Fidelity spokesperson, Robert Beauregard, dismisses the idea of zero-commission services. He implied that the race to zero movement is just there to attract new clients, but it’s just a mask.
What traders don’t realize is that the broker could be selling the traders’ order flow to compensate for the free commission. Remember, when the service is free, the user becomes the product.
Most of the time, zero-commission services fail to provide traders with the quality execution for entering and exiting a trade. That must be among the most prioritized services as it can risk trader’s position.
Continuous Crypto Craze
Investors and traders’ interest in digital currency (Bitcoin and Ethereum) will be the primary reason for the continual trends of crypto craze in online trading.
To top that, the value of cryptocurrency surges together with its popularity, making the opportunities for crypto traders bigger than its current value.
Cryptocurrency trading is hot investors and traders due to several reason:
- The crypto market never sleeps. You can always enter the market due to technological advancement.
- The volatility of the market leads to significant gains. However, there’s also a lot of risk for losses.
- Crypto market is decentralized. Unlike other currencies, crypto will not be susceptible to any government intervention or manipulation.
Options Trading Growth
The online trading scene has been witnessing the current hype that options trading is getting from investors and online traders.
In fact, according to the Chicago Board Options Exchange (CBOE) Global Market, option trading hits the breakout record of daily activity last 2021– and it continues to grow today.
When trading options, investors and traders enjoy cheaper trading costs, market accessibility, and lesser responsibilities compared to futures trading.
Today, there are numerous online brokers and financial services that charge no commission fee for options trading. This factor significantly drives the consistent growth of the instrument to the industry.
With options trading, you can also enjoy smaller outlay when anticipating and betting on a stock’s future price direction.
However, the online trading scene will most likely suffer due to the popularity growth of options trading. Here are the reasons why:
- It promotes high risk, high reward thinking, which brings emotional pressure.
- It opens stock markets to great volatility or rapid share price due to uncontrolled demand.
- Unbased transition of traders to derivatives market due to the recent success stories.
Technology Innovation and Online Trading Advancement
AI Trading
Online trading is not exempted from the revolution of Artificial Intelligence. In fact, AI has started to penetrate the industry since the start of 2020 through trading robots.
Trading robots or robo-advisors take advantage of the trading algorithm and act depending on the identified trading signals.
However, some traders worry about losing their own trading styles and strategies when using trading robots.
But in most cases, traders can preset parameters to guide the AI when to enter and exit a trade. Also, the robot will notify the trader about the trading signal in case the trader wants to execute manual decision.
One best feature of a trading robot is its ability to understand trading technicalities in a short period of time. The AI can easily analyze markets, charts, indications – which would take some time for human traders to learn.
Take a quick glance at the other advantages when using trading robots.
- No hint of trading biases as it relies on the available data rather than feeling and emotion
- Available to monitor and analyze market trends 24/7
- Ability to have quality order execution speed
Advancement of trading platforms
The exponential advancement of online trading platforms is expected to happen as technology constantly grows.
Currently, online trading platforms are now accessible to any devices and modes. You can trade anywhere, anytime, and anyhow if you have an internet connectivity and either of these devices:
- Web
- Desktop
- Mobile phone
Fun fact: Online brokerage companies like Webull and XTB have trading platforms where you can monitor the trading signals and execute trades using a smart watch.
Another spectrum that benefits from the advent of technological advancement is the user-interface and the security of the trading platforms.
Aside from MT4, most trading platform services incorporate two-way login for a more secure trading experience. To cater to beginner traders, technology can help developers to allow customization with the platform.
API Trading
The entry of a new algorithmic system to the trading scene makes application programming interface (API) a reality for everyday traders.
API is a bridge for unrelated software or computers to communicate and execute trades together. That collaboration promotes functionality and efficiency in executing trade orders.
API trading allows you to enjoy an easy and quick trade execution through automated trading tools. API liberates you to hedge bets for futures and leave out traditional and manual trades.
Here’s a quick glance with the services you’ll enjoy with API:
- Quick insights for market feeds
- Order execution and other facilities
- Order report
- Transaction information
And trading through API, you won’t miss out on any profitable opportunities. You can have access to different and popular assets like stocks, crypto, and assets.
Blockchain Trading
Experts have seen the potential of blockchain technology in some pressing issues in online trading.
Basically, blockchain technology is a quick and efficient way of sharing and storing financial transactions and recordkeeping across the computer cloud. The network is decentralized as it’s not controlled by any central authority.
In trading, it can potentially improve your trading experience as it provides traders with transparent prices, quick payment processing, and efficient transfer of stocks.
The integration of blockchain in the trading market has seen enormous potential due to its ability to streamline and expedite transaction settlement.
Traditionally, trade settlement would take days to complete. With the adaptation of blockchain, it cuts off the processing time to a mere minute.
Social Trading
Experienced traders have found another avenue to generate profit while trading online.
Through social trading, seasoned traders with a consistent and successful trading track record can share and market their resources, strategies, and insights to the community.
Basically, novice traders pay other traders to copy the latter’s trading practices and incorporate the said practices into their own.
Both traders gained to the practice of social trading. New traders learn and gain experience faster, while experienced traders monetize their knowledge and experience.
The Future of Online Trading
The future of online trading is inherently uncertain, but there are two factors that will surely be the main driver of the online trading revolution: technology advancement and geopolitical events.
Geopolitics has been influential in the transformation of the trading market. While investors and traders have seen the how technological advancement evolves the financial trading experiences
Evolution Of Artificial Intelligence
Artificial intelligence (AI) and machine learning (ML) are already significant in analyzing markets, predicting price movements, and executing trades. In fact, it’s the front of automated trading.
Today’s traders already feel the importance of AI, especially its ability to swiftly process information and execute a trade. The nature of AI makes the analysis of trends, market news, and trade execution free of trading biases.
And as seen in the recent trends in AI evolution, it’s a no brainer that it will open traders to more sophisticated insights and be able to be programmed to follow one’s trading strategy and risk management techniques.
However, the abilities of AI as of now are still incapable of handling the current needs of online traders to success: decision making and implementation of risk management techniques.
More Advanced Trading Platforms
Currently, the introduction of mobile trading platforms or applications has transformed the scene of online trading.
Traders now have the liberty to execute and monitor their trades on the go, given that they have internet connection at their disposal.
In the future, the advancement of online trading platforms will be driven by innovative technologies, user demand, and the growing and competing landscape.
The most possible changes will be:
- Blockchain: Wide integration of blockchain technology for a quicker and more efficient trading execution.
- Cybersecurity Measure: Traders can enjoy a more secure platform with the integration of cybersecurity like biometrics and two-way authentication.
- User-friendly Interface: Online brokerages firms and financial services can develop or improve their own trading platforms to prioritize intuitive and user-friendly interface for easy navigation.
- Robo-advisor Norm: The benefits of automated trading today will be more advanced due to the consistent technological innovation.
- Personalized Education Paths: Platforms can integrate AI to personalize education paths based on the users’ trading history, skill level, and preferences.
Emerging Markets Due to Globalization
Globalization made it possible for online traders to easily and quickly access the global market. This led to profitable opportunities for traders despite the distant boundaries.
Future traders could see broader trading opportunities and new ways to profit through the emergence of new avenues for trading through blockchain-based markets.
Also, with the development of financial technologies, you can expect a development of personalized financial ecosystems, integrating banking, investing, budgeting, and financial planning into a seamless user experience.
Blockchain and Cryptocurrency Craze
The rise of blockchain technology has led to the emergence of cryptocurrencies and decentralized finance (DeFi). These technologies could further streamline and secure online trading processes, providing faster and more transparent transactions.
As the cryptocurrency market matures, there may be increased demand for sophisticated derivatives and hedging instruments to manage risks associated with price volatility.
Financial institutions could develop new cryptocurrency derivatives products, such as options and futures, to cater to institutional investors seeking risk management tools in the crypto space. These products could provide more avenues for traditional financial players to enter the cryptocurrency markets.
