As we hurtle towards the end of the year, a new 12 months loom ahead of us, and if you’re an investor, it’s a time to take stock of your strategy and assess whether it’s working for you, as well as spending some time getting clued up about the key shifts set to reshape the landscape of the market in 2025.
Driven by technological advancements, evolving market dynamics and changing investor behaviour, with each new year comes a host of new opportunities, and as all savvy investors know, staying ahead of the game is crucial if you’re to capitalise on them.
From the rise of artificial intelligence to the growing importance of proprietary trading strategies, it’s all change in the financial markets for 2025 – and here, we take a look at the biggest trading trend predictions set to dominate.
Artificial intelligence and machine learning
Artificial intelligence (AI) and machine learning in the trading sphere isn’t actually anything new, but over the coming year we can expect integration and applications taken to the next level and transforming the trading experience.
Both AI and machine learning have changed the playing field by offering a new approach to algorithmic trading, capable of analysing huge amounts of data in microseconds. It’s a speed that far exceeds what’s possible for humans, and the levels of accuracy are far superior too, with errors non-existent. Increasingly, we’re seeing them utilised by investors as tools for for more efficient and effective trading, and such is their ability to rapidly identify patterns and forecast upcoming movements in the market that they are already becoming indispensable.
In 2025, innovations within AI and machine learning will continue, elevating the trading game as they occur. Models will become more sophisticated and better equipped to forecast based on a range of different economic and geopolitical factors, and platforms themselves will become more user-friendly and accessible, allowing traders of all skill and experience levels to take advantage of them to enhance their strategies.
Proprietary trading
Proprietary trading is set to come into its own next year. If you’re new to the concept, then here’s a brief overview of how it works: Large financial institutions and trading firms leverage their own capital (as opposed to clients’) to assume positions within the market, seeking to accrue profits through the buying and selling of stocks, commodities and other assets. It often involves making high-risk moves in a bid to make the highest possible returns and underpinned by highly sophisticated strategies.
With funds like Pro Traders Fund now offering funding and support to skilled traders and allowing them to trade with the firm’s capital rather than their own, we can expect to see these grow in popularity in line with proprietary trading in 2025.
Retail trading platforms and social trading
Retail trading has been gathering momentum over recent years, in part thanks to the democratisation of financial markets but also by the growth of accessible platforms designed to facilitate it. The likes of eToro and Robinhood are prime examples, and through user-friendly systems and interfaces, have made it easier than ever for traders of all skill and experience levels to get involved.
Next year, we can expect the popularity of retail trading continue its upward trajectory, and in particular this could be driven by the rise of ‘social trading’ – a feature that allows investors to follow and mirror the trades of more experienced traders. It’s something that has already proved to be popular amongst amateur investors looking to learn the ropes, and with a new, younger generation of traders having moved onto the playing field since the birth of cryptocurrency, it has allowed even the greenest to start out on a stronger foot and make informed decisions when building their portfolios from scratch.
Next year, we’ll likely see social trading platforms become even more advanced, powered by AI and machine learning to make it simpler than ever for users to find the traders they want to follow and offering an element of automation for more efficient trading.
Blockchain and tokenisation of assets
If you’ve been baffled by the absence of cryptocurrency on this list so far, then rest assured, it isn’t going anywhere. But perhaps more significant in the current climate is the advances we’re set to see on the blockchains on which they are based, and the tokenisation of assets that is set to further transform financial markets before 2025 is out.
Blockchain’s ability to create new types of financial instruments should not be underestimated, and tokenised assets will make it possible for investors to trade all types of assets on platforms based on blockchain, going beyond crypto to allow for the likes of real estate, artwork and commodities to be bought and sold quickly, safely and securely.
What’s particularly interesting about this is the possibilities it opens up in terms of fractional ownership of such assets. Traders will be able to purchase portions of such assets and resell them for potentially substantial returns, making them accessible to those who cannot afford – or do not wish to stake such substantial amounts of capital in – entire assets but who are still keen to take advantage of the opportunities they offer to diversify and grow their portfolios.
Disclaimer: Investing money carries risk, do so at your own risk and we advise people to never invest more money than they can afford to lose and to seek professional advice before doing so.
