Online trading has caused a major paradigm shift in
investing. At the turn of the millennium, there are over 6
million online investment accounts, up from 1.5 million in
1997. As a result, start-up firms now compete directly with
financial institutions to serve investors in the new
Economy, and the clear winner is the customer. The
competition between the brick and mortar institutions and
the Internet-based companies has dramatically lowered the
costs of investing, and empowered the individual investor
to take control of their own investment strategy.
On-line trading will revolutionize the currency markets by
making it accessible to the small and medium sized
investor. For the first time, these investors have the
ability to execute transactions of between $100,000 and
$10,000,000 at the same prices the Interbank market offers
for deals well over $10,000,000. This benefits both those
who wish to speculate on the direction of the currency
markets for profit, as well as the money manager or
corporate treasurer looking to hedge against unwanted
exposure to future price fluctuations in the currency
markets. I am going to discuss the Benefits of Trading
Forex.
Very few on-line brokers are able to offer their clients
real-time bid/ask quotes, which facilitates instantaneous
deal execution - no missed market opportunities. Real-time
prices also allow investors to compare an on-line broker's
dealing spread with that of other pricing services, to
ensure they are receiving the best possible price on all
their Forex transactions.
Many on-line Forex brokers require their clients to request
a price before dealing. This is disadvantageous for a
number of reasons, primarily because it significantly
lengthens the execution process from just a few seconds to
possibly as long as a minute. In a fast paced market, this
could make a significant difference in an investor's profit
potential. Also, some of the more unscrupulous brokers may
use the opportunity to look at an investor's current
position. Once they have determined whether the investor is
a buyer or a seller, they 'shade' the price to increase
their own profit on the transaction.
Timing is everything in the fast-paced Forex market.
On-line trades are executed and confirmed within seconds,
which ensures that traders do not miss market
opportunities. Even the incremental extra time it takes to
complete a transaction over the phone can mean a big
difference in profit potential. Introduction simply,
executing trades electronically reduces manual effort,
thereby lowering the costs of doing business. On-line
brokers are then able to pass along the savings to their
client base. The fast-paced nature of the Forex market
compels traders to execute multiple trades each day. It is
vital for each client to have real-time information about
their current position in order to make well-informed
trading decisions.
Access to timely and relevant information is critical.
Professional traders pay thousands of dollars each month
for access to major information providers. However, the
very nature of the Internet affords users free access to
reliable market information from a variety of sources,
including real-time price quotes, international news,
government-issued economic indicators and reports, as well
as subjective information such as expert commentary and
analysis, trader chat forums etc.
The main advantage of the Forex market over any
exchange-traded instruments is that the Forex market is a
true 24-hour market. Whether it's 6pm or 6am, somewhere in
the world there are always buyers and sellers actively
trading Forex so that investors can respond to breaking
news immediately. In the currency markets, your portfolio
won't be affected by after hours earning reports or analyst
conference calls. The ECNs (Electronic Communication
Networks) exist to bring together buyers and sellers when
possible.
----------------------------------------------------
Andrew Daigle is the owner, creator and author of many
successful websites including ForexBoost at
http://www.ForexBoost.com and
http://forex-trading-system.typepad.com , Free Forex
Training Resource for the Novice and Advanced Forex trader.
No comments:
Post a Comment