forex-online-trading

Online Foreign Currency Trading Platform

The small retail traders have been able to participate in the forex trade only in last 15 years or so, after use of internet started in a big way for online foreign currency trading. Earlier large minimum transaction sizes made the forex trade out of the reach of the retail investor. Only big financial institutions, major currency dealers and big speculators were able to take advantage of this fantastic market.

Now trading platforms are available to the small investors. Inter-bank transactions are done in large units, but market maker brokers are able to break down these large units and provide small traders an opening in the forex trade. The market maker broker provides not only a trading platform, but also plenty of support to help individual retail traders. They provide software thru which the traders can do all the trading from their PC. Real time price fluctuations are available in various forms in graphical and numerical displays. Also various tools are available for analysis of data.The market maker provides quotes for different currencies. These quotes are the conversion prices between the currencies that the market maker will honor when a deal is executed. The market price level as indicated by real-time display can be used for guidance but they should not be considered as final rate for a deal.

The trader has to deposit a margin money for trading. Some brokers also insist on an additional maintenance margin which is more like a safety deposit. The traders can leverage the margin money to trade much higher amounts. It is common to have a leverage of 1:100. This means that the trader has to deposit a margin money of USD 1000 to trade with USD 100,000 , which is a common lot size.

As soon as the trader enters a trade with USD 100,000 the software automatically sets a stop-loss such that the trader does not lose more than the margin money. In case the price fluctuation is in unfavorable direction and the trader starts losing money, the software will transact a deal as soon as the loss reaches the amount in the margin money. On the other hand there is no restriction on how much the trader can gain when price fluctuation is favorable.

This type of leverage you cannot find easily in any other market. Although leverage of 1:100 is the most common, some brokers allow even higher leverage.

A demo account is one of the many facilities offered by many market maker broker. Very often there is no charge for the demo account. The account holders are provided with trading platforms just like real traders with exact quotes and all the displays. The major difference is that demo account holder does not invest any money, only does mock “trades” with some “dummy” money provided by the system. The demo account provides very good opportunity for learning and testing the trading skill.

Forex market is an exciting field. People with patience and discipline have unlimited earning opportunity.

posted by Sanjay Johari @ 11:23 PM