It goes without saying that the information technology progresses with the speed of light. Just some decade ago the computers we used to have were less powerful than our smart phones nowadays. Signing up for a certain cloud storage service would grant you as much memory for free as it just was not possible to fit into a single room some 30 years ago. Technological development certainly drives progress in our lives and today we are going to uncover a very interesting niche – trading.
What is trading?
In simple terms, trading is a process of generating profit from buying and selling some items. There are various types of trading though and in this article we are going to focus on the financial trading. What is it? It is a certain speculative activity that turns around buying assets low and selling them high. This way, a trader, extracts profits from trading various instruments. Those instruments are, usually, stocks, metals, currency pairs, derivatives, and so on.
The main idea of financial trading is the purchase of an asset without actually using it. The only purpose is to purchase an asset that will appreciate in value and then get rid of it.
How was the trading done in the past?
You may imagine that the trading was a pretty hard thing to do when the technology was not here. Some 100 years ago there was no short-term trading at all, as it would take a few weeks to actually mail the money and receive you share as a tangible document. Then trading became more developed due to the developments in telephone lines. This has powered up cross border trading too, although it was still performed rather slow. However, with the development of computers, and then, once the internet happened – the massive shift has begun.
What are the modern trading technologies?
When speaking of trading technologies, the most developed market is actually Forex. Even though the market is the largest in the world, it has only opened its doors for retail investors in 90’s. That time there was absolutely no technology to support online currency trading, so the brokers had to actually develop the trading software on their own. Some of them could master their platforms and deliver great terminals. Others could only deliver some basic functionality.
In early 2000’s a major software developer has appeared in the FX industry – MetaQuotes. That’s the company that currently powers up at least a half of the retail FX brokerage sector. Its most popular product is MetaTrader 4, yet today there is also a newer version MetaTrader 5. Even though the later has not been adopted widely by now, there are some brokers offering it. A good example would be Admiral Markets MT5 platform, a software that supports both virtual and live trading on the FX market.
Modern FX platforms come with unmatched functionality and lots of 3rd party addons. The speed of execution is also lightning-fast, it only takes a few milliseconds to place and fill your order. Finally, it has also become very accessible to open up your own brokerage. While some 20 years ago a company would need to spend millions into having a proper technology in place, today it may cost around $20,000 to actually get started with your own FX brokerage.