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The Future Of Investing: Three Technology-Enabled Trends

The realm of online trading has changed indelibly since its earliest inception. Today, even the most novice traders can own and trade instruments such as commodities, cryptocurrency, forex, and bonds. This ‘democratisation’ or broader market accessibility has; for the most part, been powered by rapid technological advancement, which has in turn led to a significant upsurge in demand for digital trading platforms and tools locally.

Commenting on the latest trends within the local online trading industry is Roger Eskinazi, Managing Partner at Tickmill, who believes that with technology as an enabler, the local market can reach its full potential. “With increasing access to technology and a growing appetite for investment, we envision a landscape in which online trading can become an empowering force.

“Bringing more investors into the fold using digital transformation, will allow us to realise broader national aims such as financial inclusion, allowing more South Africans to participate in the wealth-building opportunities of our dynamic financial markets. For clues as to what lies ahead and where the market is heading, we look both to the macroeconomic environment as well as to the pace of local, infrastructural development and key societal shifts.”

He explores three key trends that will shape the future of online trading:

1.     Learning from the best: the rise of copy trading

One of the most noticeable, emerging trends in the market is social trading. This practice exists at the intersection between traditional trading expertise and the rise of social media. Essentially, social trading allows individuals to connect with each other, share ideas, offer advice and feedback, and copy the trades of more experienced traders.

Inspired by this trend, platforms such as Tickmill have developed integrated social trading systems that allow individuals to automatically replicate the decisions made by other successful traders. Tickmill’s AutoTrade system allows users to copy successful traders by following their tried-and-tested strategies.

The system gives users access to a diverse range of trader systems and allows them to choose a system based on their own trading style. Successful trades are replicated in the relevant user’s account, bringing automation to the realm of mirror trading while giving traders full control over aspects such as multiplier value so that they can weigh up the potential of each trade in terms of risk and reward.

“The benefits of social trading go two ways. Tools such as ours allow ‘strategy providers’ to earn performance fees over and above the returns on their investments. You could think of these types of individuals as the influencers of the online trading world.

Similarly, traders who follow these strategy providers reap the benefit of basing their trades on the time, knowledge, and experience of industry veterans. It’s one of the most effective ways in which novice traders can enter the market, start earning returns early on in their trading journeys, and take the lessons they learn through social trading, into their own experience as they learn and grow,” says Eskinazi.

2.     Online trading goes mobile

Another key trend in South Africa’s online trading environment is the use of mobile devices. The latest statistics collated by GSMA Intelligence saw mobile connections in South Africans soar to a staggering 187% of the total population at the beginning of 2023. The number of mobile connections in the country increased by 4 million between 2022 and 2023, with a large proportion of society owning more than one mobile device.

The knock-on effect of this dramatic upsurge in mobile penetration has been the noticeable increase in the use of mobile devices for trading purposes. This trend has been particularly prominent in countries where forex trading has reached high levels of adoption.

The increasing use of mobile devices for online trading means that the responsiveness of digital platforms across a range of devices has become a non-negotiable. Traders need to be able to access their trading accounts, process trades, view reports, and transact wherever they are using the device that is the closest at hand.

3.     AI-powered tools to mitigate the human risk

Arguably, the biggest impact that technology has made on online trading can be tied to the emergence of artificial intelligence (AI). For decades, traders relied heavily on their own sources of technical analyses, their knowledge of market indicators, and historical data. Although these kinds of research activities proved effective for many traders, their ultimate success has been stymied by the existence of the human element.

Emotions such as fear and greed have often stood in the way of traders building successful investment portfolios that are robust enough to survive market volatility. But machine learning models can analyse vast datasets, identify trading patterns, and make split-second trading decisions, often far faster and more accurately than human traders. These algorithms can trade across various asset classes, including stocks, commodities, forex, and cryptocurrencies.

Furthermore, natural language processing (NLP) techniques can be used to analyse news articles, social media sentiment, and other textual data sources. AI models continue to prove effective at gauging market sentiment and assessing the potential impact of news events on asset prices, enabling traders to make timely adjustments to their positions.

Today, online trading platforms like Tickmill, have harnessed the power of AI in developing tools that users can access and leverage in making better decisions, formulating future-proof strategies and maximising returns. A good example of this is Tickmill’s Acuity Trading Tool, which, crawls through millions of news articles and data releases to provide traders with an overview of market sentiment. By employing a simple, intuitive user interface, we’ve made this tool more accessible and interpretable to traders, regardless of their level of experience.

As technology continues to advance, the role of AI in online trading is likely to expand further, enabling traders and investors to make more informed decisions and navigate the complexities involved with trading in financial markets.