Online Trading on Forex and Stock Markets

Forex trading online

Online forex trading refers to trading currencies through a brokerage company, providing access to an online trading platform. Forex market has evolved during years and became the largest market in the world by its daily turnover. Trading online became widely spread in the late '90s due to the Internet access, since individuals became part of online trading.

Factors such as size, volatility, decentralization of the forex market have contributed to its rapid popularization and success. Due to highly liquid nature of this market, traders can make large volume trades without affecting any given exchange rate significantly. These positions are available to forex traders because of the low margin requirements that are provided by brokers.

Online forex is the only market that is open 24 hours a day with decent liquidity throughout the day. For those traders, who have a day job or a busy schedule, it is a quite optimal market to trade. Forex traders use analysis that are based on technical and fundamental indicators, which allow them to forecast the movement of the traded currency pair. With online forex trading, execution speeds are really fast and it allows traders to quickly buy and sell currencies which may result in either profits or losses.

The forex trading online has some characteristics that distinguish it from other markets. Among these characteristics is the OTC (over the counter) nature which means that the market is not centralized in a particular place, but operates online and is not regulated. Another key distinguishing feature of this market is that it is accessible to everyone.

Today the market is full with brokers providing various trading conditions, trading platforms that give access to trading instruments. It has even become difficult to decide with which broker to cooperate, since they differ in a few features and conditions.

Stock market trading

Forex market is not the only market type that interests traders. Many people are interested to trade stocks, indices or other instruments that are not included in the Forex market.

The stock market is the market in which the shares of publicly held companies are traded through exchanges (2 biggest stock exchanges in the USA are: the New York Stock Exchange and the Nasdaq).

Trading in stock markets has a long history, there was time when people were gathering in the trading floors and were making trading transactions, thus owning shares of various companies. However, things have changed after the introduction of new instruments – CFD (Contract for Difference) which allowed investors to make speculations in the market without physically owning the asset. This is how stock trading online emerged.

The stock market is split into the following two sections: the primary market and the secondary market. The primary market is where securities are created. Institutional investors usually buy most of the shares from investment banks. All subsequent trading occurs in the secondary market and the participants are institutional and individual investors.

One of the most common methods of buying stocks is using a brokerage. There was a certain period of time, when only wealthy people could afford a broker since at that time only expensive brokers were available, but due to the Internet and development of the CFD, online brokers and stock market trading became increasingly popular and today anyone can afford investing in the market. The only difference is that they do not physically own the underlying asset of the CFD. Thus, it may be implied that stock trading online enables investors to take part in trading on the largest world markets with quite accessible prices.

Whether you are trading stocks or, forex or any other market you should define your goals and choose a trading strategy that works for you. Make sure that your personality is in the center of the trading strategy you choose.