Japan, once known as a country with deposits, is said to have experienced an investment boom in recent years. Indeed, in the Japanese stock market, the number of individual shareholders in Japan reached 15,259,000 as of the end of March 2024, an increase of 362,000 year-on-year. In addition, there has also been a record inflow of funds into the investment trust market and an increase in the number of NISA accounts opened with the introduction of the new NISA system, indicating a growing interest in 'fund formation' among many people.
Amidst this investment boom, Forex trading is gaining popularity, especially among the younger generation in their 30s and 40s. The increase in the number of individual investors is said to be due to recent technological advancements.
In the world of FX, known in Japanese as ‘foreign exchange margin trading’, the evolution of technology has significantly changed the style, speed, accuracy and convenience of trading. Today, even beginners who ask, “What is Forex?” and even novices can easily face the challenges of FX trading through the use of applications. This section discusses the evolution of technology to support individual investors.
Smartphone Apps and Mobile Technology
Today, both international and domestic Forex companies offer free smartphone and mobile applications. While the content varies from one Forex company to another, they are all designed to allow traders to trade from any location, and are multi-functional and intuitive.
Most of them have functions that allow traders to view the prices of currency pairs (e.g. USD/JPY, EUR/USD, etc.) in real time, as well as check the spread (the difference between the bid and offer prices) and perform appropriate graphical analysis with candlesticks, line charts, bar charts, etc.
You can also complete everything related to trading on one mobile device, including deposits, withdrawals, notifications, and checking the latest news, which is useful for traders who invest on the side as they can react instantly on the go.
Many apps also allow users to trade using a demo account, allowing them to experience and learn about real trading before trading with their own funds.
Automated Trading (Algorithmic Trading)
Automated trading (algorithmic trading) refers to a system where trading is done automatically according to predetermined rules and programs, without humans making manual purchases and sales, and allows trading 24 hours a day without the need to continuously monitor the market. Because trading is done by automatically executing strategies based on previous market statistics and analysis, panic selling and greedy buying can be avoided without being influenced by emotions.
For example, it has the advantage that you can avoid losing transaction time even when you are sleeping, and you can respond without being affected by excessive information, so for people who are too busy to watch the market, investment beginners who are not yet confident in their decisions to cut losses and take profits, and people who want to run a stable and logical strategy for a long time. This function is suitable for those who want to manage a stable and logical strategy for a long time.
On the other hand, it is not necessarily a panacea, because past performance does not guarantee the future, and it cannot respond when the market moves differently from the past or changes suddenly. It is important to use it as one of the functions to support trading.
Big Data Analysis and AI Functions
Big data analytics is also used in FX to analyze large amounts of trading and market data in real-time to predict market prices, build trading strategies, and manage risks.
Big data analysis is a technology that collects and processes large amounts of diverse data (trading history, exchange rate fluctuations, economic indicators, SNS posts, news articles, etc.) that cannot be handled by conventional analysis methods, to gain useful insights. Trend analysis functions that study millions of past exchange rates and order histories to predict future price movements, and sentiment analysis that analyzes SNS (X / formerly Twitter), news posts and bulletin boards to identify market 'sentiment' and 'rumor' trends, can now be done instantly even by individual investors.
In addition, this big data analysis can be combined with AI functions to provide personalized support for each investor, including their investment style and trading hours. Starting with 24-hour support from a ready-to-use chatbot, the service also includes questions such as “What is your forecast for the dollar today?” What are the important events this week?” and other questions, and is expected to strengthen its presence as a reliable partner for individual investors in the near future.
Background to the Increase in the Number of Individual Investors
As we have seen, recent advances in digital technology have been instrumental in reducing the information gap, increasing trading efficiency, and improving risk management in FX trading. This increased convenience is said to have lowered the barriers for novice investors to start trading and supported an increasing number of individual investors. In addition, entering the market has become easier than ever, with smaller margins (capital requirements) and lower spreads (transaction costs).
On the other hand, it is said that many individual investors are worried about market fluctuations and lack of financial literacy. In response to this situation, the Financial Services Authority (OJK) has asked financial institutions and other parties to strengthen education and support for new investors, and investor education is becoming increasingly important.
The recent investment boom has generated a lot of Forex commentary from experienced investors on YouTube, blogs, and social networking sites. Taking advantage of the many learning opportunities and practicing with free demo accounts and simulation tools can lead to more lasting trading success.
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