Digitization of the trading industry has revolutionized the market, but now technology is evolving. The online forex trading industry has seen significant growth of trade execution on mobile devices over the past few years.
Though mobile trading platforms have been available for a while now, traders have been reluctant to adopt them due to several constraints, but things turned the other way with the Covid-19 lockdown. Both retail and professional traders are now starting to use mobile platforms.
“We see an increase in mobile trading platform usage by our clients in recent years,” Normund Nowitzki, Head of Platform Development at Dukascopy, told Finance Magnates.
Numbers Favour Mobile Trading
Indeed, based on the data compiled by Finance Magnates Intelligence, 55 percent of traders were executed on mobile devices in the first quarter of 2021, while desktop platforms accounted for the remaining 45 percent. Though this is not a representation of the entire industry, it clearly shows a trend.
Dukascopy, which is one of the top global brokerages, revealed that the dominance of the trade executions using desktop clients is continuously decreasing. Trading volume on the mobile platforms offered by the broker jumped from almost 19 percent in the first quarter of 2017 to more than 36 percent in the second quarter of 2021.
“Although the flagship trading platform of Dukascopy is still Desktop JForex, our statistics suggest that most use both – Desktop version for convenient charting and backtesting and mobile version for position management on the road,” Nowitzki said.
Additionally, the fifth annual JPMorgan e-FICC survey, published in February 2021, conformed to this growing trend of mobile trading and is expecting mobile devices to have a big impact on the industry in the coming years.
Retail Traders Set the Trend
Other industry experts Finance Magnates talked to are also agreeing on the future dominance of mobile trading, both among retail and professional traders.
But, the retail market clearly has been at the forefront of this changing trend. “The retail market moved first in the area of providing mobile trading applications, as traders pushed brokers to provide them with a way to view pricing, pending orders and positions whilst on the move,” said Jon Light, VP of Trading Solutions at Devexperts, a trading industry technology provider.
He believes that the usage of mobile devices is ‘now extremely common across this area of the market and will not change’.
Despite the big push, the usage of the mobile platforms remains limited to trade executions and modifying positions on the move, along with price monitoring. Traders still need their multi-screen setups to analyze charts and come up with strategies.
“Trading has traditionally required traders to be in front of big screens so that they can follow charts and carry out analysis, but being able to trade on mobile is important for traders who are on the go and want to manage their positions,” Deepak Jassal, M4Markets Executive Director, told Finance Magnates.
“The markets never wait so being able to monitor and control your trades during important events or in times of volatility is crucial.”
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Institutions Are Jumping In
The adoption of mobile platforms was strengthened when the industry saw interest for them among professional traders. As Nowitzki pointed out, these on-the-go platforms complement push notifications, and instant access only complements stationary computers.
But, professional traders can never go mobile-only as it is not convenient to create strategies or analyze several currencies at once on a small screen. “Besides, it might seem reckless to rely on a mobile device solely as both phone and Internet performance can fail anytime,” Nowitzki added.
Institutions also need to consider the regulatory control and information security requirements these firms must adhere to. “Bigger institutions are understanding the risks and becoming more comfortable with their security controls, they have come up to speed with modern practices, such as multi-factor authentication and secure protocols,” the Devexperts VP said.
Mobile platforms have several other limitations too. “Some of the major challenges with mobile platforms that Devexperts have dealt with are performance, security and user experience,” according to Light.
“It’s important to make sure that the mobile applications are performant when dealing with market data even when the connection is bad.” He further detailed that Devexperts has built a proprietary binary protocol that solves this problem.
“Security is obviously important, and the applications need to adhere to the latest security requirements to keep the data safe,” Light added.
Another key challenge in front of the mobile platform developers is the abundance of the mobile device form factor and the availability of multiple mobile operating systems in the market.
“Another challenge we face is extreme variability in devices, especially those working on Android OS, which makes it tough to create an app that would perfectly fit any operating system, performance level, and screen size. As an alternative solution, we have developed a web platform, a tool designed to run on any device, operating system and under any technical conditions,” the Dukascopy Platform Development Head said.
The policy of Apple and Google for admitting applications on the AppStore and PlayStore is another barrier in front of the brokerages as they do not allow listing of several kinds of trading services. Though this can be bypassed on Android devices, there is no way to circumvent this with Apple, as the company has a monopoly on app listings.
“While we have a green light from FINMA to offer binary options to our clients, Appstore and Playmarket reject such apps,” Nowitzki said.
Despite some serious limitations, innovative technologies can significantly bypass several other shortcomings of mobile trading. “We managed to allow algo trading on our iOS and Android apps using our remote servers. Traders can now start and manage their automatic strategies using their phones,” Nowitzki said. “In general, we believe that trading services with cloud saving and cross-platform features are and will be clear winners in the ever-changing trading software industry.”
Jassal added: “We expect that most professional traders will continue to prefer the desktop experience, but at the same time, with all the improvements available on mobile trading, a well-designed mobile application could help shift a number of traders from desktop to mobile, or at least convince them to use both interchangeably. It’s just a matter of being able to offer an application that is user-friendly and meets the needs of your traders.”