Remember the good old days when you had to go to the library to conduct research? That trip could take at least a couple of hours. Now, with a computer and a good search engine, you have a wealth of resources at your fingertips. This is especially true for online trading. Instead of calling the brokers, waiting for their confirmation of the trades and feeding them with lots of commissions, you can use the broker’s proprietary online trading platform to trade at your own convenience with a much lower execution cost.
Darling of Online Trading
Among stocks, bonds, currencies and derivatives, the forex market is especially suited for online trading. Here are a few reasons why forex is the darling of online trading.
The forex market is the world’s largest financial market and trades between 4 to 5 trillion U.S. dollars a day. Unlike stocks, you can execute at the price quotes you see on the screen with little slippages due to the liquidity in the currency market. The availability of broadband Internet makes the market even more transparent and allows instant execution of orders.
Currencies trade 24 hours a day from around Sunday 5 p.m. EST to Friday 4 p.m. EST. Given the market continuity, you can buy or sell the major currency pairs through your online broker anywhere during any time zones — European, American and Asian. This means you have more opportunities to make a profit and have little chance of missing a trade.
Professional traders follow streams of economic data points and political events to gauge the direction of currencies. Many others use charts and patterns to predict the moves of the currency pairs in the short-run as well as the longer-term. Good online broker platform integrates real-time prices, news, charting tools and execution all on the same screen, allowing the traders to set up, execute and monitor the trades with the click of a few buttons.
With stocks, you can express your bullish view by buying a stock. But if you are bearish, not all exchanges allow you to short their stocks, and not all stocks have listed options. In the forex market, you have an equal opportunity to buy or sell any currency versus a base currency.
Rising Popularity of Forex Trading
The forex market offers tremendous liquidity, transparency, flexibility in trading and requires no commissions but a tiny bid-ask spread. Better still, you can trade forex at home, work or when you travel by using your computer, laptop or mobile phone. No wonder some consider it is the most exciting type of armchair trading. Given the ease of trading forex and its lucrative opportunities, some may think that forex trading is akin to gambling. This is not necessarily true. If you trade without any strategy, risk measures or profit targets while focusing too much on gains, then you may as well gamble in the casino rather than trade in the forex market. In fact, successful traders take every opportunity to learn about the fundamental and technical aspects of the currency pairs. They also practice their trading plans and strategies with a demo account until they feel ready, set up strict stop losses and risk management plans to protect themselves, constantly re-evaluate their trading strategies and check their emotions. The good news is that you can achieve all the above by partnering with a reliable online forex broker.
Finding the Right Online Trading
A leading international and award-winning forex broker, Think Forex allows you to trade both foreign currencies and contracts for difference (CFD) on their high-tech online trading platform. Think Forex is regulated by the Australian Securities and Investments Commission and segregates client’s funds for your protection. The company is dedicated to providing traders with low trading costs, a secured trading environment, fast execution and unwavering customer services. Think Forex also offers a demo account with live quotes and realistic spreads, FX University and weekly webinars, all at no costs.