At a time where remote trading is at an all-time high, the future of online forex trading is set to involve cloud computing even more so, making participation in the market easier, securer and more efficient.
According to a recent survey conducted by the financial technology company, Integral, cloud technology is set to dominate the world of forex trading over the next 25 years or so. 28% of respondents, consisting of forex trading managers at financial intuitions across the globe, claimed that they would operate all of their forex technology in the cloud by 2025.
Foreign exchange trading online has had a lengthy history with technology, being one of the most adaptable assets compared to other financial markets. With a constantly changing market, it is also the most suited to a cloud-based system.
The past year, with an increase in remote working and trading due to the pandemic, has made it clear that forex trading is already heavily reliant on technology. Financial corporations are therefore turning to the use of cloud computing to make data management more cost-effective, centralised and efficient.
Why Is Cloud Computing Set to Soar in the Forex Trading Sector?
Globally, there has been an increased demand for remote cloud computing solutions, which has only been accelerated by the coronavirus pandemic. The institutions and investors that have already been managing their forex business with cloud technology, have been able to continue to work throughout, despite the possible disruptions as a result of a remote working environment. This has caused financial corporations and forex investors, to re-evaluate their trading strategies when it comes to trading and access to forex data, with the integration of cloud computing at the forefront of their minds.
The forex market, the world’s largest financial market with a value of around $6million, is surmised to have technology upgrades and cloud computing at the top of the development agenda for the years to come, according to Integral’s commissioned independent research on the subject.
Building similar software from scratch can cause a lot of unnecessary and complex issues for a financial company, and can also lead to increased exposure to potential risks. The ability to maintain lower operational costs through outsourced forex and cloud technology, therefore has become more attractive to enhance profit and ease.
Ultimately, forex trading is all about consuming data to make well-informed decisions. Therefore, the scalability and flexibility of the cloud, allows investors to easily access and consume the data necessary to inform their trading decisions. Likewise, the forex trading brokers can use the cloud themselves, to analysis data and improve their own performance.
The results from the aforementioned survey, signal that the ongoing rise in cloud usage for the forex trading industry is driven by several reasons, including:
- The lower cost of the technology
- The ease of integration with this instrument of the financial market
- The ability to customise the cloud to fit the forex trading infrastructure
- The ease of accessibility between workforces, brokers and investors
Even out of the companies that intend to use a combination of cloud and on-premise technology, the sector is set to see a rise in usage from 24% of forex trading firms to 41% in the future.
The increase in cloud computing is expected to go hand-in-hand with the growth in application programming interface (API) trading, which sees a connection being made between a set of automated trading algorithms, and the trader’s preferred forex broker platform, for the purpose of obtaining real-time pricing data and place trades. It’s understandable that this type of trading is enhanced by the cloud, as access to forex data is readily available in an easier and quicker way.
How Can Forex Trading Participants Benefit from Cloud Computing?
The volatility of the forex market means that investors and brokers need to have quick and constant access to the market. The involvement of cloud computing in this process lends itself well to providing much faster access to relevant data, as well as a quicker deployment and time to market. It provides full flexibility to react to market movements and opportunities in a significantly decreased amount of time, including the access to readily available analytical tools.
The ease of access and maintaining data through the cloud, means that those involved in the forex trading sector can focus further on managing their trading risks, optimising their position in the market, and ultimately, impact upon their profitability. For forex brokers, the low cost and efficiency of this technology, can also help to improve their overall profits.
With the ongoing pandemic also having its influence on all aspects of trading, the remote accessibility that comes with cloud computing, is increasingly becoming a necessity and is key to the future of sophisticated workflow of forex trading companies and investors.
What Are the Risks That Come with Using the Cloud?
There are some challenges that investors, brokers and financial business can face when integrating cloud computing into their forex functions. Firstly, the migration from storage on devices or on-premise technology to the cloud can take more time than expected, and there may be some difficulty moving old systems to the cloud. This being said, the scalability and efficiency of cloud technology means that the workflow of forex firms can be cheaper and quicker in the long-run.
In its first introduction to the forex market, there were some concerns over the likelihood of cyber hacks or viruses, if the cloud was to be used instead of traditional forms of data storage. In present times, and as cloud usage is set to increase, the cybersecurity capabilities of the cloud providers have further advanced to actually decrease the risks in question.
Even though in theory online forex trading using the cloud is cost effective, there also runs the risk of corporations undervaluing the effectiveness of a cloud system. The cost of modifying the current IT infrastructure and training of staff can outweigh the cost saved from implementing cloud technology. However, as previously mentioned, this may not always be the case for a forex trading company, as the nature of the market allows itself for this kind of upgrade in technology, more so than any other financial instrument.
Financial firms can also be affected by the type of cloud technology they use, as it should allow for greater control over its technology infrastructure. There may be the risk of certain times when the cloud goes down if there is inconsistent trading traffic, but companies that have this more in-depth control should be able to adjust during these periods. Some private cloud providers also offer bespoke adaption to the organisation’s requirements, so that its forex traders can have complete flexibility.
Looking to the Future of Forex Trading
With the nature of the forex market, and the adaptation of remote trading in recent circumstances, it’s clear to see why cloud computing is set to feature highly in the coming years for forex trading platforms, and the investors who participate in the market. Predicted to be in full flow by 2025, investors and financial firms of all types and variations are expected to have their online forex trading made cheaper and more efficient, thanks to the help of cloud computing.