Online foreign exchange trading occurs in real time. Exchange rates are
constantly changing, in intervals of seconds. Quotes are accurate for the time
they are displayed only. At any moment, a different rate may be quoted.
When a trader locks in a rate and executes a transaction, that transaction is
immediately processed; the trade has been executed.
Up-to-date exchange rates
As rates change so rapidly, any Forex software must display the most up-to-
date rates. To accomplish this, the Forex software is continuously
communicating with a remote server that provides the most current exchange
rates. The rates quoted, unlike traditional bank exchange rates, are actual
tradable rates. A trader may choose to “lock in” to a rate (called the “freeze
rate”) only as long as it is displayed.
Trading online on Forex platforms
The internet revolution caused a major change in the way Forex trading is
conducted throughout the world.
Until the advent of the internet-Forex age at the end of the 1990’s, Forex
trading was conducted via phone orders (or fax, or in-person), posted to
brokers or banks. Most of the trading could be executed only during business
hours. The same was true for most activities related to Forex, such as making
the deposits necessary for trading, not to mention profit taking. The internet
has radically altered the Forex market, enabling around the clock trading and
conveniences such as the use of credit cards for fund deposits.
Forex on the internet: basic steps
In general, the individual Forex trader is required to fulfill two steps prior to
trading:
- Register at the trading platform
- Deposit funds to facilitate trading
discussion:
Registering on Forex
Registration is done online by the individual trader. There are various forms
used in the industry. Some are quite simple, where others are longer and
more time-consuming. In part, this can be attributed to governmental or
other authorities’ requirements, though some Forex platforms require more
information than is actually needed. Some even require a face-to-face
meeting, or to obtain hard copies of required documents such as a passport,
or driver’s license.
The key requirements for registration are the trader’s full name, telephone,
e-mail address, residence, and sometimes also the trader’s yearly income or
capital (equity) and an ID number (passport / driver’s license / SSN / etc.).
Typically, the Forex platform is not required to run a thorough check, but rely
on the registrant to be truthful. Nevertheless, each Forex platform conducts
certain routines, in order to check and verify the authenticity of the details
provided.
Registrants are required to declare that funds used for trading are not in
question, and are not the result of any criminal act or money laundering
activity. This is mandatory as part of a global anti-money laundering effort.
Depositing funds
New registrants must deposit funds to facilitate trading. However, the
majority of the Forex platforms today require that, in addition to funds used
for actual trading, an additional amount be deposited. Often called
“maintenance margin” or “activity collateral”, its purpose is for the platform
to have an additional guarantee. Some of the platforms that require an
additional deposit do pay interest on the collateral, which is “frozen” under
the trader’s name.
The Easy-Forex™ Trading Platform does NOT require any additional guarantee,
and allows trading with 100% of the amount deposited. Easy-Forex™ is able to
provide these advantages because it assures “guaranteed rates and Stop-
Loss”. That means that there will never be any additional requirement for
funds as a result of a “gap” that causes you to surpass the Stop-Loss. See “20
issues you must consider”
Trading online
The trading platform operates 24 hours a day just as the global Forex market
runs around the clock.
However, many online Forex market makers require the download and
installation of software specific to their own trading platform. Consequently,
accessibility is limited to those terminals that have the software. Since Forex
trading is borderless, and may be performed at any given time, it is obviously
advantageous to have access to trading from as many locations as possible.
The Easy-Forex™ Trading Platform is a fully web-based system, which means
trading can be conducted from any computer connected to the internet.
Traders are only required to log-in, ensure they have available funds to trade,
or make new deposits, and commence trading.
The Trading Platform: real-time software
The main feature of any Forex trading platform is real time access to
exchange rates, to deal and order making, to deposits and withdrawals, and
to monitoring the status of positions and one’s account.
The Easy-Forex™ Trading Platform system uses web services to continuously
fetch the most current exchange rates. The most recent data displays without
the need for a page refresh. This includes account status screens such as “My
Position”, which updates continually to reflect changes in rates and other real
time elements.
Transaction processing and storage
As soon as a transaction is executed, the relevant data is processed securely
and sent to the data server where it is stored. A backup is created on a
different server farm, to ensure data integrity and continuity. All of this
happens in real time, with no human intervention.
Trading via brokers and dealing rooms (by phone)
Performing Forex trading via Dealing Room dealers (over the phone) requires
knowledge about the way dealing rooms work, and the terminologies used in
the course of trading.
At start, the client should specify whether he/she is interested in obtaining a
QUOTE (in order to make a deal) or just an INDICATION. In the case of an
indication, the price given does not bind the dealer, but rather provides
information about market conditions.
When asking for QUOTE, the trader must specify the currency pair and the
deal amount (volume). For example: “Need a quote for EUR/USD in
EUR100,000”.
It is wise to withhold from the dealer the intended direction of the deal,
specifying the pair only. Accordingly, the dealer then provides a quote
comprising two prices, buy and sell (“both sides quote”). The quote binds the
dealer for the very second it is given. If the trader does not immediately ask
for execution, then the price is no longer in force. The dealer would then tell
the customer “risk”, or “change”, meaning – the price quoted is no longer in
force. In such case, the trader should ask for a new price.
On the other hand, in order to make a deal, the trader must proclaim “buy”
or “sell”, together with the currency (or the price).
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