How Will the Introduction of 5G Effect Global Trading?

The highly anticipated rollout of 5G mobile technology in the UK has been surprisingly controversial.

16:22 19 July 2019

Particularly when you consider the involvement of Chinese firm Huawei.

In fact, Prime Minister Theresa May came under significant fire for allowing the brand to supply non-core equipment the UK’s burgeoning 5G mobile networks, with some suggesting that Huawei’s operations are subject to influence from the Chinese state.

Still, 5G was officially rolled out by EE in various cities on May 30^th, 2019, with O2 and 3Mobile set to follow suit in the summer. But what exactly is this technology, and how will it impact on the world’s financial markets?

What is 5G and why is it Important?

Whilst the term 5G may well sound grand and complex, in this instance it simply refers to ‘fifth generation’.

This means that it’s the latest iteration of technology that mobile devices use to achieve connectivity, whether you own a smartphone or a high-end gaming tablet.

The more important question, of course, is what are the main differences between 4G and 5G technology? After all, 4G was more of a marginal upgrade on the previous iteration, but in this case it’s thought that 5G will bring more significant changes to mobile network technology.

Quite simply, 5G is widely considered to be faster, more efficient and significantly more intuitive than its predecessor, whilst it will also boast considerably lower levels of latency.

This is not only a key differentiator between 4G and 5G, but it also highlights one of the biggest advantages of the latter.

Latency refers to the amount of time that passes from the moment that information is sent from a device to when it can be used by the receiver, reducing this essentially means that 5G mobile networks can be used as viable replacements for cable modem and Wi-Fi.

What Does this Mean for Traders?

The issue of latency is an interesting one for financial traders, particularly with some many investors now accessing platforms like Oanda through their smartphone.

By being able to connect to 5G networks with rapid speed and low latency, investors can trade more effectively in real-time, whilst arguably increasing the volume of orders that they execute in a short period of time (which is imperative for day traders or those that rely on high-frequency algorithms.

It’s also worth noting that 5G delivers far higher frequencies than usual, which will reduce the number of glitches in the system. Historically, mobile networks used low frequencies over the wireless spectrum to deliver service, but they typically lacked power and could not always be relied on.

Interestingly, these higher frequencies won’t travel as far as lower ones, and this will require 5G networks to invest in a significant overhaul of their infrastructure. This will involve the large-scale build out of new cell antennas, but in the long-term traders will be able to benefit from a superior service.

There will also be minimal downtime across 5G networks, which is an important factor in an age where a growing number of non-phone devices are being connected to the Internet.

The cumulative effect of these devices can place a drag on the speed of service, but 5G networks will circumnavigate this. After all, it’s estimated that 5G will be up to 100-times faster than 4G technology, and this will provide a significant boost to networks nationwide.

This is great news for traders, who can avoid unnecessary gaps in trading activity and potentially increase their efficiency in the process.