The future of forex trading

The emergence of electronic trading platforms has empowered forex trading to excel through new frontiers, helping to bolster accessibility throughout mobile markets and provide greater accuracy in terms of technical analysis. 

Crucially, artificial intelligence has helped pave the way for significant improvements in analysis and decision-making within the industry. Although the evolution of AI can’t guarantee success for traders, it can certainly help them to operate more efficiently. 

In 2022, currency trading volumes reached an unprecedented $7.5 trillion per day, and this figure is only likely to rise as more AI developments bring more substantial levels of performance for traders. 

While we stand on the cusp of a new technological frontier for artificial intelligence and generative AI, it’s worth considering what this will mean for the quality of technical analysis and predictive forecasts available to traders. With this in mind, let’s explore what the future holds for forex as technology continues to evolve: 

How AI is revolutionizing forex

Artificial intelligence is a powerful tool that can bring automation to the forex industry on a scale that’s never been possible before. In utilizing AI software, traders can gain access to projections on the forecast of forex market prices and automatically action trades in their broker’s account. 

On a fundamental level, AI represents the most efficient, straightforward, and safe means of investing money in forex. So much so, that around 90% of active forex traders have already incorporated AI to execute orders and form strategies. 

The power of AI is also being felt in mobile forex trading platforms, with market leaders like MetaTrader 5 incorporating a vast array of tools for traders. 

MetaTrader 5 already features vast levels of features, but it’s also possible for users to get dozens of trading applications, indicators, and even hire professional freelancers to build custom trading robots and technical indicators by using MQL5.

MetaTrader 5 boasts the largest community of traders, with over 7 million unique visitors every month.

Furthermore, the vast array of artificial intelligence that’s packed into MetaQuotes’ MetaTrader platforms extends to fundamental analysis also. MetaTrader 5’s Economic Calendar is used to compile a series of macroeconomic indicators that can help to analyze the economic state of a country and subsequently forecast upcoming currency fluctuations. 

Looking to the future of generative AI

The relationship between AI and forex is likely to strengthen in the near future with the arrival of generative artificial intelligence platforms like ChatGPT. 

As AI becomes more sophisticated, it’s likely to inform decision-making even more, and it will be possible to draw more insight from unstructured datasets that can be analyzed in real-time. 

One of the biggest developments in generative AI is ChatGPT, which is a platform that’s capable of utilizing natural language processing (NLP) to aid traders in making more intelligent decisions and gaining more help in achieving their personal goals. 

ChatGPT works based on the prompts provided by its users, and this means that it can analyze historical data on demand to help create new trading strategies while also actively analyzing upcoming markets and emerging trends. 

The combination of AI and NLP will help traders to bolster their forex trading strategies, which will ultimately lead to more intelligent trading decisions.

ChatGPT is building up to become a highly disruptive technology throughout a range of industries, and its influence may be felt heavily in forex over the coming years. 

Because the technology works on user prompts, traders will have the ability to create strategies that are personalized to conform to their own individual trading goals, and generative AI will be capable of reacting quickly to market changes concerning forex, making it both an innovative tool in both proactive and reactive forex trading. 

Understanding sentiment

Artificial intelligence is also helping to bring more accuracy to predictive forecasting within forex through better levels of market sentiment. 

The beauty of the social media age, from a trading standpoint, is that we’ve become far better positioned to react to breaking news stories than ever before. 

Trading the news has formed a core principle of forex trading over the decades, and rolling news cycles can be an excellent means of trading quickly to maximize profit potential. 

We saw this in action most recently in September 2022, during the announcement of the UK government’s mini-budget, which was negatively received by analysts and paved the way for many forex traders to act on the news and make million in profit by shorting the British pound. 

Artificial intelligence can also bring more automation to predictive analytics in this regard by conducting social listening by analyzing social media posts and news articles. 

Through AI tools, it’s possible to detect changes in the market perception of currencies far quicker than it would be possible for humans to locate and compile sentiment across distributed sources. 

These sentiment analysis algorithms can compile and assess whether emerging stories and social media posts cover certain currencies in a positive or negative light, and should an increasing trend of positive or negative sentiment begin to emerge, the AI tool will take decisive action without the need for human intervention. 

Looking to the future of forex

While the future of forex will naturally incorporate the evolution of AI and NLP to further optimize the quality of insights available to traders, other technologies will also be incorporated to bring better convenience across the forex landscape. 

Greater levels of digitization will be delivered through the implementation of blockchain trading, which can team up with AI platforms to bring automated market actions that can deliver further profitability due to there being no requirement for a middleman. 

“We must focus our efforts on using fintech to help develop the real economy. That starts with the treasurers and asset managers who can face huge operational inefficiencies with their forex setups which directly affect their bottom line,” said Eric Huttman, CEO of MilltechFX. 

“Now is the time to leverage digital solutions to implement widespread and strategic change. If all parts of the financial services industry are to ‘build back better’ for their customers, the use of these technologies to establish a more efficient, transparent and cost-effective way of doing things will be vital.”

Although it’s unclear just how big forex markets can become, the combination of AI and other developing technologies will deliver an unprecedented level of market insight, analysis, and forecasting which bring greater market accessibility and success in the future. With this in mind, it’s reasonable for trading volumes to continue to increase to new levels over the coming years.