The Internet is one of the greatest inventions of the 20th century. It had opened doors to many possibilities which did not exist before. Trading in Foreign Exchange or simply Forex-Trading is one such domain where Internet has done wonders. Earlier Forex-Trading was limited to inter-bank trading or big Foreign Institutional Investors (FIIs) apart from central banks of various countries. Retail investors were largely absent from this trading. This was considered to be out of bounds for retail or individual investors.
All of these changed in 1996, when first online Forex-trading started. This gave rise to retail Forex-Trading where individuals or retail investors like financial institutions, individuals with high-net-worth and other non-banking institutions could trade in Forex. Brokerage firms started operating in Forex-Trading with retail investors. This opened the Forex market for small as well as big individual investors to take part in it with the help of brokerage firms or banks.
To trade one has to just open a trading account with banks or brokerage firms and start trading by themselves. Soon this became a trend and people started opening their trading accounts. This also became more popular with the spread of Internet and various online resources like financial websites, portals, literature and other materials containing information about Forex and its markets. One-click online support enables beginners to easily take a plunge into Forex-trading. Many online trading Forex brokers too started spreading a word about Forex-trading and its virtues.
Today, there exist many Forex-trading broker firms that lend assistance to individuals and layman into investing their finances in the Forex market. These firms charge commissions and other levies based on the nature of trade and the amount that gets deducted from the profits of their customers. In return they offer many services like suggesting which currencies to buy/sell, the appropriate time to sell or buy, researching the market, its financial and general economic conditions related to Forex-trading and give a full report to their customers. They also buy/sell and take decisions on behalf of their customers in lieu of bigger commissions. However, the choice of brokerage firms should not be done on hunches. Customer must carry out a proper research on various companies offering brokerage services in Online Forex Tradingbefore hiring for anyone. Here are some factors that customers must weigh-in before hiring any online trading broker firm.
- Reputationand experience. Experience and reputation of the firms must be assessed beforehand. Firms with more experiences can advise better to their customers.
- Regulation. Firms should come under the regulations of their respective governing bodies and their track-record must be known publically.
- The Numberof currencies covered. The customer should inquire about the products, currencies and market range offered to them and whether these will be beneficial to them.
- Tools and platformsused. The user should know the various software, tools and platform used for online trading by the broker firms. These can help them in analyzing the market and its conditions.
- Fees and commissions. The client should ask explicitly for the fees and commissions charged by these firms under various circumstances or products. There should be no hidden costs applied.
Online trading in Forex is often advertised by brokerage firms as a sure-way-to-get-rich. Many software applications and tools are also available online to help a customer in analyzing and selecting profitable trades. Automated trading software is used by many to give a boost to the whole trading process by letting the automated system select trades on behalf of the customers or traders. But such software should always be consciously and one should never solely rely on them as they can be scams to extricate money.