Broker to Trading

CFD trading is technology driven as it uses electronic contracts, as well as a broader ecosystem of connected brokers, liquidity providers and platforms. CFDs are derivatives which are based on real markets. When trading a CFD, the trader enters into a contract with the CFD provider to exchange the difference between the value of the CFD at the beginning of the trade and the end of the trade. The value of the CFD aims to mirror the value of the underlying market. As such, the CFD trader can go long or short and use leverage.

CFDs can be used by traders who need very fast order execution, as well as those who trade at a slower pace, and they are integrated into the wider infrastructure of electronic technologies, including data centers. These technologies live at the forefront of innovation, as they are subject to ever increasing demands of capacity, speed and performance. To meet these demands and others, various technologies have emerged which can be seen as playing or potentially playing a role in CFD trading. One such technology is wearable tech, which is to say finding ways to make wearables such as watches digitally useful. Wearable tech is already being directly used by a limited number of CFD brokers (as wearable apps), though in general CFD trading software stops at mobile.

What is wearable tech?

As the name suggests this is technology which can be worn, contrasting itself with technology which can be interacted with like a laptop, or held and interacted with such as a smartphone. Because a tech is wearable, creates constraints on both its design and functionality. It has to have that capacity a normal watch for example possesses, to blend into the background or invisibility of one's awareness of items attached to one's body. It also needs to have an aesthetic value, as it becomes part of the wearer's persona, the image they project and the impression they create.

This can be turned around to find ways in which the wearable enhances or focuses the image of the wearer, even creating one which they may wish to have. Some may want a wearable to be more functional that stylish and to blend more into the background of their projected sense of being.

What are the requirements of trading tech?

Trading tech has a number of key requirements. Firstly, it is necessary that it, at a minimum, allows one to monitor trades and preferably also lets one place or close orders. Of these, the capacity to close an order is more critical, as the need of monitoring a trade on the go is that it can be exited if necessary. This can be a double-edged sword, because a properly analysed and prepared trade, with full access to trading tools (i.e. on desktop), will have built into it some kind of time frame and exit route. So closing the trade with reduced access to information may not necessarily be ideal.

As one moves down from desktop (or laptop) to mobile, the presentation of information and the capacity to use it diminishes. While a good mobile interface will have the essentials of trading, including the chart and indicators, the fact it is on a small screen may impact the extent to which the trader can perform an analysis. Not necessarily however, as some may find that a mobile interface may be even equal to a desktop, particularly if the trader is chart based.

In general, though, tools such as robots work on the desktop version (this is true of MetaTrader) and having information spread about a bigger screen (or even on multiple screens in the classic 'trader's setup') may make for better understanding and usage of it.

Wearables cut off access to trading information represented in the chart, and and access to space to view data. A good mobile platform can capture much of the functionality of a desktop experience, at least for self-directed trading. Though for high pressure, volatile trades like news trading, the trader may well prefer a desktop setup.

However a wearable focuses on functions such as alerts and the capacity to close or open trades. This is because wearables in trading are currently represented by watches, which have limitations in terms of expected function, processing power and screen size. Future developments may find a way to provide a wearable which also has features more like or even improvements on a desktop experience.

Future developments in wearables

Glasses are a wearable which can provide a range of functions, including correcting for vision defects, protecting from sunlight and even just for style. So they have a multiple offering of functions, as they are a wearable which focuses on the eye. A watch's evolution as a wearable reflects its core function as a timepiece, something to glance at but which can provide quickly and clearly key information. Trading is more about analysing, so to trade, one needs a way to represent the chart and its complexity of visual information, which is the core deliverer of trading information.

However smart glasses are a technology that can offer the effect of a larger screen than the actual glass size (which is limited by the fact it needs to be wearable), using technology such as waveguide optics. But perhaps even more pertinently, AR (Augmented Reality) has the capacity to create immersive worlds to interact with, which could be particularly useful to traders. Currently, however CFD providers focus on desktop and mobile apps. A few also provide wearables, but in the shape of watch apps.

Trading as it traditionally took place on a trading floor, is an auditory experience. Taking it online has made it more of a visual experience. However, AR earpieces could in theory provide some of the auditory information to enhance the trading experience, for example news feeds but represented in a contextual way for the trader, perhaps based on what they are currently trading or even thinking about trading.

This brings us to neural interfaces, which are currently being developed. Neural interfaces have the potential for fine grained control of trading, although the core issue of needing to step back from the noise of trading would remain, in that no matter how the chart is represented, the trader needs to make sure they are not whipsawed by the market. However, in theory the capacity for augmenting short term trading, making the trader better able to scalp for example, remains. This is true potentially of AR in glasses as well, without needing an actual neural interface.

Improvements in representation of data

The trader relies on the chart as the core tool for seeing the market. The chart represents the movement of prices of markets over time. It can be broken down into different time frames and different chart price type representations, for example candlestick charts or line charts. Technical indicators seek to capture deeper representations of charting data, in effect to compile past patterns of data and to find ways of seeking their reappearance, with the understanding that these patterns leave trails, but importantly they leave trails forward in time, indicating their appearance.

Wearables may offer a way to project possibilities in a way which current charts do not, in effect to bypass indicators and look for possible outcomes. The trader could explore each avenue, and see where it might lead. This is not a potential capacity of a watch, but may be something a more visually oriented wearable could provide, especially one which could project data into more complex formations.

Summary and commentary

The idea of a wearable is that one can comfortably wear it in everyday use, and that it is useful and maybe even adds style to the user's persona as seen by themselves and other people (the last requirement has arguably become more prominent as technology evolves). The core requirement of trading is to be able to analyse, make, adjust, close and monitor trades. Desktop offers the fullest capacity to do all these things (which may be enhanced with multi-screen setups and graphics processors). However, the desktop is not portable, and while a laptop is, it is not portable in the way a wearable is. So marrying this level of everyday use with trading functionality, may seem like a way to take trading with you.

Now, whether this is desirable or not is another question. The trader will be trained (by themselves or via courses or books) to analyse markets in such a way that they create plans that are not dependant on constant checking. The exception is short-term trading, which by its nature, demands attention. However the trader may find robots to be a way to deal with higher frequency trading, and in all events may need access to a laptop or desktop for this type of trading.

But for human length trades, such as position trading or swing trading, the trader may not want or need to be paying attention to trade trade, except at pre-defined moments. Not doing so can help give a sense of perspective and may make for better trade planning, and avoid over analysing a trade. Nonetheless, wearables offer the capacity for now to receive alerts and make trades. Developments in wearables may provide the capacity via AR to look deep into a trade, and help alter or continue the trading plan.