Game Changers: 5 Modern Revolutions in Forex Trading

A New Year always brings with it eager anticipation about what lies ahead, but it's also got us thinking today about events and technological breakthroughs from the recent past that have forever altered the forex trading landscape.

So what will 2018 hold for traders, and are revolutionary, new breakthroughs once again on the horizon? We will soon see, I suppose, but in the meantime, here are five (5) times in recent years when the world of forex trading was indeed changed—mostly for the better—by emergent trends, technologies, legal and regulatory changes, and the like.

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Heightened Emphasis on News & Geopolitics

Revolutions in Forex Trading: News & GeopoliticsThe global economy and lingering impact of past (and/or current) financial crises in Europe, Asia, the U.S., and elsewhere have made both traders and investors much more "on edge" in recent years. Perhaps that's the reason behind the frequent, news-driven price swings seen across all markets. But add to that the volatility and geopolitical risk resulting from terrorism, changing economic policies, Brexit-inspired trading opportunities, and divisive political rhetoric happening all over the world, and news and geopolitics are now prime catalysts that move markets each day.

That's both exciting and challenging for intraday traders, no doubt, but again, for longer-term trend traders, the message is simpler: Stay informed, but don't fixate on the latest news and economic data. Trade sensibly and based on proven signals, and especially over the longer term, the same principles and trading strategies that worked years and even decades before remain consistent performers today.

The Advancement of the Internet

Few among us may have been around the markets or trading long enough to remember, for example, back when dial-up Internet would "freeze" in the middle of a trade, or worse yet, at the moment of execution. Did it go through? Did it not? You really had no idea.

And if you think that sounds bad, how about the pre-Internet days when forex trading required a phone call to your broker just to initiate new or manage existing positions?

Thanks to the Internet as we now know it, online forex trading is now such a mainstay that most traders can't imagine life without the ability to conduct their trading as quickly and conveniently as we all do today. It's quite possible, in fact, that there's been no revolution in forex trading quite as big, or significant, as the advent of the Internet and online trading.

Mobile Trading Technology

Revolutions in Forex TradingHaving just mentioned the Internet, there's probably no better time to recognize the revolutionary mobile trading apps and technology that today enable forex trading right from our smart phones, tablets, and other mobile devices. Considering that the "traditional" trading desk used to be home to multiple screens, large and powerful computer equipment, and much more, it's remarkable to think that today, everything from detailed analysis and charting, active, combative trade management, and even real-time trade execution can be done with only a few taps of a smart phone or tablet.

Technological breakthroughs like the Internet and mobile trading have really helped pave the way for lifestyle trading, and thousands of new and aspiring traders each year have been able to pursue their trading dreams because of the access and reliability that mobile trading affords us all. Perhaps you're even one of them?

Also read: Is Mobile Trading Right for You?

QE & Changing Central Bank Monetary Policies

Forex trading in this, the modern era, has been defined by events and happenings that were largely uncommon years ago. Today, for example, it's practically commonplace to hear about "hands-on" monetary policies from central banks driving price action across equity and currency markets. From quantitative easing to outright currency manipulation, it seems like forces outside of just pure price action now have the power to move markets…especially on shorter-term time frames.

Fortunately for longer-term trend traders, though, well-known price patterns are largely unaffected, so even at a time when shorter-term price action can become volatile and choppy, trading in the direction of the prevailing trend remains a viable, longer-term strategy.

See related: 3 Clear Cut Set-ups "Hiding" on the Weekly Chart

New Margin Rules

Tighter Margin Requirements for Forex TradingMostly starting in 2015 and after, the U.S. National Futures Association (NFA) and other regulatory agencies worldwide have tightened up margin requirements to limit the amount of leverage allowed across the world of forex trading. These regulatory changes were driven largely by catastrophic losses suffered in January 2015, when the Swiss National Bank (SNB) unexpectedly removed the long-standing peg between the Swiss franc (CHF) and euro (EUR). The swift, and in many cases, unlimited and exponential losses that resulted from the ensuing price swing in EURCHF, routed or even wiped out the accounts of highly leveraged traders, showing firsthand the dangers of trading on margin.

Regulatory changes have since limited the use of margin to about 50:1 in many cases, although there are still markets and locales where traders can trade margin as high as 200:1.

To be clear, we would never, under any circumstances, recommend using leverage in that way. In fact, we advise traders to avoiding trading on margin wherever possible, and applaud the regulatory bodies for the steps they've taken to protect traders' interests and further legitimize—if not revolutionize—the forex trading industry in recent years.

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