The rise of mobile trading has given investors better tools to navigate today’s often-volatile and always-challenging forex market
The last 20 years have seen the forex trading market undergo all manner of changes, and where once investors were left with no option but to touch base with their brokers on the phone before placing a trade, technological developments have recently put those same services, and many more like them, at investors’ fingertips. The mid-90s brought with it the birth of internet trading, and rendered once complex services easily accessible. However, the advent of the smartphone has really revolutionised the market in a way like never before, and any investor – no matter how inexperienced – can gain access to the world’s largest market 24 hours a day, seven days a week.
[E]lectronic dealing accounts for over two thirds of all currency transactions, and a number of recent corruption cases have done little to stem the decline of the jobs in foreign exchange trading
Already, electronic dealing accounts for over two thirds of all currency transactions, and a number of recent corruption cases have done little to stem the decline of the jobs in foreign exchange trading. Both cheaper and more transparent than human traders, the rise of electronic platforms – principally those on mobiles – means that forex trading today is more efficient and accessible than it ever has been.
Technology has been key, but regulators have also played their part in exasperating the shift away from humans and onto electronic platforms by imposing charges on certain transactions. And while forex trading-derived revenues at banks are on the slide, the growth of electronic trading platform providers is indicative of a wider technological shift in the industry.
Still, the ease by which traders can tap into forex markets does not necessarily guarantee a return on investment. Novice and experienced traders alike would be wise to take into account a series of major events that have recently shaken the market. Currency woes are widespread, oil prices are plummeting and the spectre of deflation is looming large over the Eurozone, which have together left the forex market in a precarious position.
We spoke to Roger Bach, CEO of Henyep Capital Markets (HY Markets) about the major ways in which the forex market has changed of late, and the key points of note for any investors looking to execute a trade. With over 30 years of operational experience and a proven ability to trade all major markets with comfort and security, HY Markets allows investors to trade all global capital markets from a single integrated account. And as a leading trading platform provider and key proponent of incorporating the latest technological advances, HY Markets is well positioned to pass comment on the major ways in which the forex market is changing.
Can you tell us briefly about the rise of mobile trading and how the market has changed, if at all, in recent years?
The spread of knowledge, the easy availability of mobile trading, and the general advance in smartphone technology, as well as increased internet access has certainly contributed to the growth in the number of clients trading forex, and the amount of volume traded on mobile devices. Simple and easy to use trading applications like ours, combined with the fact that the trader is able to log online 24 hours a day no matter where they are, have positively affected this marketplace.
From your point of view, what is the significance of mobile trading in today’s market?
Well, it’s estimated that one in four forex trades are now done through a mobile device, which is significant. Given the continuing developments in technology and increase in online access that we just discussed, we only see this as a continuing trend and we could see half of all trades being done on mobile devices within the next five years. As such, it’s vital for us to be at the forefront of this movement and continue to provide and update mobile trading services for our clients.
What influence has the falling price of oil had on the forex market?
OPEC’s increase in production of, and decreased global demand for, crude oil has caused for the price of oil to drop below $50 a barrel for the first time since May 2009. What affect does this have on other markets such as forex? The real question is whether it’s supply or demand that’s the key factor. If it is supply, then fairly simply limiting production can reverse the price drop, which means the issue is more isolated and has less affect on the forex markets.
If it is in fact demand, this could be indicative of slower economic growth to come. Analysts notice that the current drop in oil resembles the summer of 2008 where oil dropped from $147 per barrel to under $40 per barrel. If demand is the issue, the forex market may likely see the US dollar strengthen as equities fall and investors look for a safe haven in the greenback, and we’d also see a boost to precious metals. Specific effects of this recent shift we have seen include increasing demand for yen as global stock prices wane, and the falling value of the Canadian dollar, given that Canada is an oil-producing nation, net exporter of crude, and thus, the country has been feeling the effects of this drop in oil prices.
How has the Eurozone been affected, and what’s your forecast for this region?
Official figures show that we have deflation in Eurozone for the first time since 2009, which adds pressure to the ECB to enact further stimulus measures in order to reach their inflation target of two percent. The fall in oil price plays a part in this, but you also have to question the effect of the overall monetary policies, and look at the stability of the Eurozone member states, Greece in particular.
The Greek debt to international creditors is a priority issue in that Greece’s left-wing anti-austerity Syriza party wants to re-negotiate the terms of the bailout, which is concerning for the Eurozone on the whole. These factors have contributed to a sharp decline in the euro, causing it to drop to $1.16, levels that we haven’t seen since 2006.
For 2015, there are indications to suggest Eurozone growth. The ECB is likely to continue quantitative easing, and the measures it implemented in 2014 will take additional effect. For example, its support of credit creation through buying asset-backed securities is having a positive impact on credit markets. However, the political tensions, such as the Greek election, and elections in other European nations; Spain and Portugal, could cause uncertainty in the market and will likely temper the recovery and bring lethargic growth to the Eurozone in the coming year.
What’s your take on the recent SNB decision to un-peg the Swiss Franc, and how did the resulting fluctuation affect HY Markets?
That was a remarkable and somewhat surprising move on the part of the SNB. The Swiss Franc moved 40 percent against the euro in one day. Currencies shifting 40 percent in a day can have unforeseeable effects on forex markets, investors can be badly hit and in some extreme cases, forex companies can be rendered insolvent, as we saw. We are happy to say HY Markets has always had robust and sensible risk management policies in place, and we were unaffected by this unprecedented volatility.
What advantages can HY markets give forex traders ahead of competitors?
With HY Markets, we offer a wide range of products and account types to suit any and all investor’s needs. We believe in providing the right solution for each customer, and impeccable customer service is key. We have a long operational history; Henyep has been in the financial services space for over 35 years and we bring that experience and knowledge to every aspect of the business, together with strong operational, regulatory and financial controls.
What are your ambitions for the future of HY Markets?
We are constantly looking to improve our technologies and increase our product offering. We are currently working on enhancements to our website and our mobile platforms. In addition, we recently upgraded our products offering, in particular our equities, and we look to expand our product offering further in 2015.
HY Markets has been awarded Best Broker, Northern Europe, Southern Europe, and Best Retail Platform, 2015.