Why Are Digital Futures Trading Platforms so Important?
Reading Time: 5 minutes Like with any other kind of investing, the ability to do it all online instead of going to the brick and mortar establishment is simply more pragmatic. However, how big of a difference does this actually make when it comes to trading digital futures? Digital futures are a contract between two parties to make a transaction at a certain date and for a certain value. The reason why this is different from regular trading is due to the fact that you and the other party need to agree on the price while making the contract while the price/value may change in the future.
This gives both parties a greater sense of predictability and reliability, seeing as how they don’t have to worry whether they’ll be able to A) sell their products or B) have the resources to make the purchase, thus, one can focus on other logistical issues. However, what kind of change can be introduced into the world of trading futures with the help of digital platforms?
Table of Contents
1. What has changed?
Roughly speaking, the ability to trade in digital futures online has, somewhat, transformed the game. The biggest difference here comes in three separate areas. First, there’s the issue of liquidity which is naturally larger, due to the fact that digital platforms allow for a greater number of participants and there’s more money circling the market at any given moment.
The next advantage is speed, seeing as how you no longer have to wait for the broker to execute your order – your platform is your broker, which is a massive advantage.
Unfortunately, the volatility of the market is greater as well, due to the fact that placing an order in much larger numbers means that there’s always a risk of the avalanche effect (in any direction).
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On the other hand, the nature of futures trading isn’t that different, yet, you might need to figure out a new approach to it, seeing as how it is in a new and peculiar environment.
2. Pit or screen: advantages and disadvantages
Since it came to existence, screen trading has had some quite prominent downsides. First of all, there’s an obvious lack of transparency and this also makes it easier for a single large order to disrupt it.
Moreover, this can be done completely anonymously, which leaves a lot of space for various forms of manipulation.
This potential for disaster alone makes some people less than confident. On the other hand, the advantages of screen trading are also quite numerous.
The fees are substantially lower, the overall marketplace feels a lot more democratic and it’s easier for efficient marketers to get ahead.
3. Speed of response and accuracy of assessment
When it comes to trading, there are two things that matter the most – the validity of information and the speed of your response.
High latency was one of the greatest plights of any form of online trading, but fortunately, with present-day platforms, this latency was reduced to the minimum and, at the moment, it’s almost non-existent.
This gives the users an unparalleled speed of response. As for the accuracy of assessment, instead of having to ask all over the place, you get one massive platform where you have all the prices displayed and can use this as a guiding beacon.
4. Blockchain may make things easier
New technologies, like the blockchain technology, can make digital futures trading much more reliable.
You see, there’s always a risk that the party that feels damaged in the process might try to back out of the deal but, seeing as how the information in the blockchain can’t be altered in this way, there will be no way for one to do so.
This might make more and more people interested in this industry, thus increasing the overall money pool.
More money means greater popularity, a larger audience and greater investments in the technological advancement and improvement of these platforms.
5. Algorithmic systems trading usage
The next thing you need to understand is the fact that the option of an algorithmic trading system (which is the basis for all digital trading platforms) is getting used in more and more industries.
We’re talking about agricultural futures, foreign exchange futures, metals and energy products volumes, equity futures and many other factors.
One more commodity that has an honorary place on this list is precious metals, as one of the go-to commodities when it comes to diversifying one’s investment portfolio.
This is why online traders might want to find a platform for monitoring the gold price, alongside with their standard digital trading futures platform.
6. Machine learning and regulations
When it comes to any form of digital trading, there are two things that are expected to alter its course in the nearest future – machine learning (and other forms of algorithm improvements) and regulations.
With the concept of machine learning, combined with such a volume of people on the market, it is easy to see how these platforms will get a chance to self-improve.
As for the regulations, due to the fact that the bulk of these platforms operate internationally, things are a bit more complex.
7. Finding the right platform
Of course, so far we’ve discussed platforms as a term but there are some subtle and other not-so-subtle differences between the platforms themselves.
Your ability to find the one that suits you the best might be what comes to decide both how you use it and what your users experience is like.
Some platforms have specialized features or specialize in certain industries and these are the things that can customize your approach to this situation. Now, different platforms specialize in different aspects.
So, there are some platforms that offer lower commissions, others that focus on mobile friendliness and those that provide the smoothest learning curve. Just be honest about your priorities and you’ll be able to choose without a problem.
It goes without saying that digital trading, in general, is the way of the future. This is due to the fact that it offers superior service in virtually every aspect of its business and offers greater speed, reliability and confidence in transactions.
This is exactly what some of the most hesitant people needed to join the trading world. As the funds on the market increase, so will the investments, which might make future upgrades closer than ever before.
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