How using predictive analytics and big data in Forex Trading can enhance your success

others | Data Science   |   
Published April 8, 2020   |   

With an average daily turnover of approximately 5.1 trillion USD, the Forex market is the most liquid market on earth. With technological advancements, it has become easier for investors to trade currencies through online Forex trading platforms. But it isn’t easy to make money trading this market, as there are so many things that need to be taken into consideration in order to make smart trading choices.
First thing to know:  you need to think about your personality, your trading knowledge, your financial goals and the level of risk you’re willing to bear. How do you want to improve your goals? What can you do to better pursue your dreams? – all of these factors contribute to determining your trader personality profile, as well as your overall strategy. If you don’t know exactly where to start, don’t worry, we’ll cover a few tips about different ways to enter the trading world. While day trading has a steep learning curve, it’s one of the most challenging and stimulating types of active trading
From there, you’ll need to go on a research to decide which kind of trading pairs works best with your trading method, which type of news to follow and how to understand market behavior.
To that end, predictive analytics and big data can help you save time and help you obtain useful and actionable insights about the FX market, as well as the general mood of market participants, all of which will help you achieve better trading results.

What are predictive analytics?

Investopedia describes predictive analytics as ‘the use of statistics and modeling to determine future performance based on current and historical data. Predictive analytics look at patterns in data to determine if those patterns are likely to emerge again, which allows businesses and investors to adjust where they use their resources to take advantage of possible future events’.
By helping to ‘understand possible future occurrences by analyzing the past’, predictive analysis can be used in many different industries, such as health care, customer relationship management, fraud detection, underwriting, and direct marketing.
This branch of advanced analysis techniques is increasingly used in risk management and trading the financial markets, especially very liquid markets such as the Forex market, to make better price predictions and make a higher percentage of winning trades.
Depending on the trading providers you’re looking at using, you’ll have access to different kinds of data and markets. You should therefore use one that offers the largest amount of data possible, so you can get the best and most useful available information. In this way, it will be easier to extract actionable and reliable Forex trading insights to enhance your performance.

Day Trading VS long term investing

Day trading in stocks is one of the common financial practices wherein the stocks are bought and sold on the same day or multiple times over the same day. Embracing the benefits of the small price fluctuation can be rewarding, but as mentioned earlier, it is important to occupy yourself with the right strategies to steer through the market and enjoy the profits. Before getting bogged down by the complex details of the stock market, it is essential to focus on some basic strategies that will help you survive the market. There might be thousands of traders, articles, indicators and other market instruments compelling you to leap, but it is best to keep it low key.
On the other hand, long term investing, like position trading, can also be a great trading option, especially for those wanting to capture long price movements. With such an approach to the market, you won’t have to spend too much time in front of your screens trading the markets.

Adopt good financial and saving habits

The way we spend and save money greatly affects our current financial situation, as well as our ability to reach financial stability. That’s why it’s important to adopt good financial and saving habits, to be able to live a debt-free life and invest for our future.
First, you need to know where you stand financially – so, create a budget, get control of your finances and start saving money. Think about your monthly income, and how much of that money goes to fixed expenses, so you can calculate your disposable income. If you are spending more than you earn, it’s time to make cutbacks on unnecessary expenses and find opportunities to save money.

Build a long-term strategy that will evolve according to your age

One of the most challenging aspects of investing is to develop a strategy with the optimal asset allocation strategy. This allocation will depend on your risk tolerance, your goals, and most importantly your age.
With so many financial products available these days it’s become harder and harder to choose what to invest in. Just keep in mind the following – don’t allow yourself to be distracted by all the options, just pick the product(s) that best suit your situation.

Why should you use predictive analytics and big data in your trading?

As our world is becoming more and more digitalized, it’s important to know how to take advantage of an increasingly larger amount of data. This is extremely beneficial in trading, as traders are constantly trying to find ways to predict the future price of assets.
That’s why traders use price forecast models based on a large amount of data that help them making more informed trading decisions.


Used together, predictive analytics and big data can help traders better understand the markets and, therefore, make more profitable trading decisions. Any field needs predictability, especially in trading. After all, nobody wants to invest in something without knowing the potential return on investment.