Overview of trading Forex online

How a Forex system operates in real time
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

Requirements vary with each trading platform, but these steps bear further discussion:


Registering
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  StopLoss”. 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” (Chapter 9) for more.


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).
An example:
•   The trader asks for a quote for EUR/USD.
•   The dealer says “1.2010/15”.
•   If the trader wants to buy EUR, he/she says “buy" (or "buy EURO”, or
    “15”.
•   If the trader wants to sell EUR, he/she says “sell" (or "sell EURO”, or
    “10”.
The moment the trader says “buy” (or “sell”) he/she is bound to the deal, regardless of the market situation.