As technological progress continues to be made at a rapid rate, almost every industry worldwide is being impacted. The fast-paced modern society wants things to be done quickly, more efficiently, and with greater flexibility, and the technology has to try and keep up with those demands. Nowhere is this truer than in forex and CFD trading, an industry where accumulative deals amount to billions of dollars on a daily basis.
With such vast sums at stake, any advantage an investor or trader can gain could prove potentially crucial and extremely profitable. Of course, online trading has revolutionized the sector in recent years, with traders able to access their portfolios on the move and from remote locations via their smartphone or laptop.
And the rise of data has proven an equally ground-breaking introduction, offering a level of detail previously unavailable to investors and financial advisors alike. So correctly, how has data altered the way the industry operates?
Data-Driven vs Model-Driven
Traditionally, traders have made their decisions based on investment models. These models have provided the foundation of the industry, shaping the financial markets, and contributing to their development.
But a lot of models contain assumptions – such as the theory that investors can borrow or lend at risk-free rates – when in reality, this may not be the case. That’s where data can help to eliminate these shortcomings with cold, hard facts.
The Rise Of Big Data
Big data technology allows for the collection and analysis of massive datasets, far beyond anything previously experienced in the forex and CFD markets. This advance in technology gives traders access to information on a much broader scale, which in turn means they can make better-informed investment decisions.
Analysis And Strategy
Most markets are constantly shifting, meaning investors and traders must always be aware of any swings that might affect their portfolio in either a positive or negative manner. The key to staying ahead of the game is analysis, and is furnished with a more significant amount of data means traders can do this is far more granular detail. Analysis of this kind is more likely to identify complex patterns that may not have been discernible previously, and traders can shape their strategies around the information garnered.
Advisors can also capitalize on the more considerable amount of data at their disposal to guide their clients on which markets present opportunities. They can make more accurate predictions of the ROI on a certain trade, as well as identify any potential risks that could harm their client’s portfolio.
If you are interested in even more technology-related articles and information from us here at Bit Rebels, then we have a lot to choose from.