The forex market is one of the biggest entities of its type in the world, and it’s currently worth a staggering $1.934 quadrillion (or £1.599 quadrillion to you and me).
To put this into context, this number is 2.5-times larger than the global GDP, whilst it’s also expected to grow incrementally during the coming years.
This has much to do with the technological evolution that has gripped the forex market, as this has removed numerous barriers to entry and made financial trading accessible to a mass target audience.
However, technological advancement has also created issues in terms of security in the forex market, which is why regulation is such a hot topic right now. We’ll discuss this in the post below, whilst asking what measures are in place to keep traders safe in the digital age.
Appraising the Market and Individual Trading Platforms
On a fundamental level, the forex market is overseen and regulated by the Financial Conduct Authority (FCA) in the UK.
This reputable regulator body is responsible for all financial services and trading activity in England, Scotland, Wales and Northern Ireland, which means that every single brokerage site is required to conform to real-time FCA guidelines.
This certainly implements stringent guidelines for online brokerage sites, who must maintain segregated accounts for client and company funds. They also have various operational standards that firms are compelled to adhere to, from the level of encryption required on their websites to the deposit and withdrawal of funds.
In terms of the former, all brokerage sites must be underpinned by 128-bit SSL encryption, as this is capable of safeguarding user data and the financial transactions that they make each day.
From the perspective of individual transactions, reputable trading platforms like Oanda must also ensure that investors can only withdraw profits through the same payment method with which they made their deposit.
Brokerage sites must also ensure that all accounts are secured by an individual username and password, whilst users now have the opportunity to use two-factor authentication as a way of verifying their identification across two different channels (particularly when trading with mobile devices).
Monitoring Forex Markets for Accuracy
Brokerage sites also live and die by the data and analytical tools that they share with traders, and this requires them to continually monitor the markets for accuracy in real-time.
These tools and data sets are then made available to traders, who can leverage both manual and automated systems to inform individual orders and optimise any return on their capital.
The most effective monitoring tools pertain to technical analysis, which features a number of indicators across various markets and asset classes. In the case of automated analysis, individual traders ‘coach’ software to monitor specific factors in real-time and interpret the data on their behalf.
This is ideal for high-volume or day trading, where it can be challenging for investors to guarantee accuracy and safeguard their capital investment.
In the case of automated analysis and monitoring tools, behavioural economics and emotion are also stripped from the decision-making process. This is seen as a huge advantage, particularly in a volatile forex market that sees wild price fluctuations within relatively short periods of time.