Online Foreign Exchange Trading Platforms

Day Trade Forex (FX) Futures and Spreads on the Currencies Markets

Aug 19, 2009 Henk Bekker

Individuals can day trade currencies on safe online foreign exchange trading platforms that give access to the huge and potentially highly profitable forex (FX) market.

Online foreign exchange (forex) trading platforms have in recent years moved the currencies markets from a semi-closed club for large financial institutions such as banks into the reach of ordinary private investors.

Individual day traders can now buy and sell foreign currencies (FX) online as easily as equities with transaction size sometimes as small as USD25 and trading costs limited to the spread between the bid and ask price of two foreign currencies. Like with any serious investment, online forex day traders should study the currencies market, be informed, be wary of costs and risk, and take care to avoid dealing with fraudulent companies and traders.

Selecting a Safe Online Foreign Exchange Trading Platform

A huge number and wide variety of online foreign exchange trading platforms are available to individual currency traders. The safest choice for individuals is probably to use forex trading opportunities offered by major financial institutions such as international banks. However, these institutions often require large initial deposits and large minimum transaction size.

Although a physical presence in the country of residence is no real guarantee, many day traders will feel more comfortable being able to deal locally and with the knowledge that local regulations and laws are respected. For regulatory reasons, many serious online foreign exchange trading platform do not accept investors from all territories.

Identifying Serious Online Foreign Exchange Dealers

The online foreign currency trading platforms most private individuals are like to use are not necessarily household names or represented in local malls or high streets. As a minimum, do an online search of the company to see how other traders rate the foreign exchange trading platform, software, research information, and the ease of administrating a forex account.

Serious online foreign exchange trading platforms generally:

Offer free and useful research information on foreign currency markets and non-platform specific advice on how to trade forex.
Give a clear indication of costs – if costs are more than just the spread, it is unlikely to be value for the average online forex day trader.
Do not promise high returns or recommend special trading strategies or software trading.
Emphasize that online foreign exchange trading carries risk, could be highly volatile, and may not be a suitable financial instrument for everyone.
Warn clearly that margin trading increases the risk and size of potential losses.
Do not hide contact information (including physical addresses) and are specific and upfront with the business hours when someone can be contacted by phone.
Do not take cash (or cash-like) deposits, insist that account should be funded by bank transfer or credit card, and similarly make it clear upfront how money may again be withdrawn out of the online forex trading account.

To comply with financial regulatory regulations and legal requirements, all online foreign exchange trading platforms (and international banks) require a wide range of personal and financial information before opening currency trading accounts. Steer well clear of any financial institution not requiring such information but similarly be wary of any requiring too many personal details.

Although mainly aimed at American residents, the US Commodity Futures Exchange Commission (CFTC) and the National Futures Association (NFA) has useful tips on how to spot foreign currencies trading frauds.

Use Free Forex Simulator Trading Demonstration Accounts

Many online foreign exchange trading platforms offer potential investors free forex simulator trading opportunities in free trial or demonstration accounts. It is very sensible to practice with these to become aware not only how the particular trading platform works but also for practical experience with foreign exchange trading terms, terminology, and practices.

Online day traders unfamiliar with margin rates and forex futures trading platforms should try a few high-risk forex margin futures trades on the free trial or demonstration accounts. Such simulation will quickly show just how risky these margin trades are and that traders risk the full amount traded and not the just the margin collateral.

As with other investments, traders should never risk more than they can afford to lose, not get into the foreign exchange market without sufficient knowledge of the market functioning and risk, read the fine print, and avoid being tricked by fraudsters and get-rich schemes.

The copyright of the article Online Foreign Exchange Trading Platforms in Investment is owned by Henk Bekker. Permission to republish Online Foreign Exchange Trading Platforms in print or online must be granted by the author in writing.

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