There was a time when forex trading was limited to banks and large financial institutions. But that was before the Internet spread its web and introduced the era of online forex trading. Today there are hundreds of thousands of individuals, brokers, brokerage firms, banks and governments that trade online.
The trading is not limited to any particular hours of the day like share or stocks trading but is a 24-hours activity and can be conducted from any place and at any time of the day or night. This has resulted in a sharp spurt in volumes with everyday transactions climbing to almost $2 trillion.
Other than round-the clock working, online trading has introduced several other advantages. The most important is trading in multiple currencies in multiple markets. This has brought in unlimited liquidity and flexibility. Also, a trader has access to real time quotes, and can make a trade as and when he feels comfortable.
There are no bulls or bears who operate in this market. The traders have the advantage of buying one currency and simultaneously selling another, irrespective of the direction in which the currencies are headed.
The market may be volatile but for a trained trader it is not difficult to note the trends and take advantage of the entry and exit points. Online trading has made the market fully transparent. The data is available to all traders, all over the world – in real time. There are no commissions, no exchange fees, and no hidden costs. The only commissions are those that individuals pay to forex brokers, when they conduct their trade through them
The trading is instantaneous. The orders are executed, filled and confirmed within seconds. Most brokers and trading companies offer their clients real-time quotes and data to make crucial decisions within minutes and know exactly what is happening at that instant in the market.
This makes online trading both exciting and dangerous. The traders don’t have sufficient time to reflect. They must take decisions quickly if they want to take advantage of market movements.