How Fundamental Analysis Technology is Paving the Way for Inclusivity in Forex Trading
Although the forex landscape has become increasingly accessible to traders of all scales in recent years with more brokerages offering low latency solutions, the market still struggles to shake off the perception that individual investors are at a disadvantage compared to their institutional counterparts.
According to statistics across 32 European Securities and Markets Authority (ESMA) brokers, an average of 72.2% of FX traders lose money.
In the case of leading brokerage Trade Nation, as much as 86% of users are operating on accounts that are running at a loss.
One of the key reasons why traders struggle to become profitable stems from their inability to react as fast to changes in the fiscal landscape at the same pace as institutions. This means that by the time an opportunity is discovered, trading volumes have already shortened profitability margins.
However, emerging technology is actively helping to drive more adaptive fundamental analysis for traders who simply don’t have the resources to keep up with larger market players. With this in mind, let’s take a deeper look at how fundamental analysis technology is helping to foster a more inclusive forex market for traders of all sizes:
Next-Generation Risk Management
Fundamental analysis is difficult for individual traders to manage in forex because it can come from a series of structured and unstructured data streams. Factors like central bank interest rate meetings, employment data, consumer price index (CPI), manufacturing productivity, and retail sales figures are all examples of fundamental analysis that can influence values in forex.
Measuring these metrics on a global scale can be extremely difficult, but thanks to artificial intelligence, risk management is becoming easier to automate.
Advanced AI tools have become capable of assessing the risk associated with trades and offering risk-reducing strategies that have been informed by fundamental analysis.
These AI insights can also monitor trader portfolios in real time and provide alerts if pre-determined risk thresholds are breached. This can help traders to use quality insights to protect their investments.
Artificial intelligence can also take fundamental analysis further than individual traders would otherwise be capable of, using satellite images to monitor crop performance or parking lots to analyze possible retail sales as a means of gaining the inside track in anticipating currency fluctuations.
Embracing Natural Language Processing (NLP)
One of the biggest innovations in FX fundamental analysis stems from the emergence of Natural Language Processing (NLP). Through a blend of machine learning and AI, NLP can interpret masses of textual information to draw insights from economic news, expert analysis, and social media sentiment to identify trends and opportunities as they emerge.
Additionally, NLP can process and analyze extensive unstructured data in real-time, helping traders to access deeper insights into fundamental analysis in a way that wouldn’t otherwise be possible.
This can help individual traders bolster their decision-making processes and respond faster to opportunities that could be easy to overlook using more traditional fundamental analysis platforms.
As the technology becomes more refined, NLP will be capable of leveraging predictive analytics models to anticipate future market performance and predict possible variations across different trading pairs.
Breaking Down Barriers to Accessibility
Crucially, technology has helped to make it more straightforward for traders to access timely information to improve their understanding of fundamental analysis and to make the right decisions at the most opportune time.
The vast online resources available that can help traders become more competent in their fundamental analysis may seem bewildering to new traders, but there are plenty of online brokers that offer access to educational resources that can help users learn the ropes at their own pace.
Online FX brokers have increasingly recognized the value of providing users with the tools they need to succeed, and it’s worth exploring different platforms on their merits. Whether you’re looking for a CMTrading review, AvaTrade review, Exness review, or CFD Brokers reviews, individual traders need to check for the resources each platform offers and whether they can improve the quality of their fundamental analysis.
Given that technology surrounding fundamental analysis is growing, gaining a better understanding of the insights you’re capable of gaining and acting upon is a significant advantage for traders seeking to compete with their more resourceful institutional counterparts.
Fostering an Inclusive Future
These technological advancements can help to significantly contribute to a more level playing field in forex trading. The combination of artificial intelligence, machine learning, and big data can help to drive more innovations in fundamental analysis than ever before, empowering traders of all scales to compete in a more inclusive market.
Crucially, these innovations can also help to address the worrying statistics surrounding the volume of traders who lose money on forex.
For the industry to cement its status as the world’s most lucrative market, forex must work for all traders. With the right emerging technology and opportunities to unlock the potential of fundamental analysis, FX may finally become a profitable place for everyone.
