Online forex trading

The modern forex market started forming in 70's as countries changed to floating exchange rate from the fixed one. But until late 90's, forex trading was the privilege of big guys like banks and large institutions which can play with more than ten million dollars. With the rise of internet, online forex brokers now can provide retail forex account to small guys like you and me. With a computer and high speed internet access, all you need to do is to open an account with one of the online brokers, transfer some money to fund your account and you are all set to trade.

There is no doubt that online forex trade has revolutionized the largest financial market for giving you over 200 different currency pairs to trade. It gets better. You can use practice accounts or demo accounts to get accustomed. If you thought being rich and having $1000 was a prerequisite, think again! You can start live trading with as little as $50. How?

Leverage is the answer! By using margin account, an investor can leverage higher capital and make very high return on investment (ROI). The previous example of 50:1 margin shows one can invest 13,387 USD and make a handsome 39.95% return (or 5,348.1 USD) from a relatively small movement. In simple words, the forex brokers let you borrow money.

The next question you will have is safety. How safe is online forex trading? Go with a regulated forex broker and there is nothing to worry. You need to do your homework and investigate your broker; where is it located, is it regulated and if so by who, etc. Some of such recognized regulators are the Futures Commission Merchant, National Futures Association and the US Commodity Futures Trading.

How expensive is forex trading?

Not only does forex trading have account limits start as low as $50, they also have the lowest transaction fee. One of the advantages of forex trading is that it is commission free. Although we trade through brokerage firms, there is no brokerage fee. Brokers are compensated by something called bid-ask spread, which we will discuss later in the training course.

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