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10 years ago currency trading in the forex spot market was reserved for the big dogs. Today,
small or big, the playing field has leveled. Let's look at key benefits for today's small forex trader.
Currency Trading
Trading currencies has been around for a long long time. The market for buying and selling foreign exchange has been in existence
for as long as different countries have had different currencies. However, for many years the trading of one country's currency for
another country's currency was reserved mainly for banks and big institutions. The birth of the internet has changed this and today
this wonderful business of currency speculation is open for the big player in the same way as it is for the little player!
With the birth of the internet a new form of currency trading has emerged, retail trading. Retail trading means that you and me can
open an account with an online forex broker and start trading currencies. The internet has allowed forex brokers to reach individual
traders and offer them many of the services that in the past were reserved for big institutions and banks.
Forex Brokers
One of such services that the internet has facilitated the delivery of is the trading platform. Let me explain. Each forex broker offers
as part of it's service a trading software which is downloaded to the users computer directly from the brokers website. Through this
trading software/platform traders can view live currency rates, live charts, perform real time analysis of many currency pairs, test a
forex trading system amongst many other things.
The wonderful thing about these trading platforms is that they provide the trader with a real time accurate live connection to the market.
The trader can actually see what the value of each currency pair is around the world live.
The competition amongst online forex brokers has been very favorable for the small time forex trader like you and me. This has brought
several advantages for the average person wanting to enter this business. Examples of such advantages are:
- Demo account: One of the biggest advantages online forex brokers now provide is the demo account. A demo account is a
trading account that you can open with virtually every forex broker at absolutely no cost. Through this demo account the user can
trade the forex market exactly as he or she would do with a live account. Same market conditions, same software/platform, same rates,
same charts etc.
- Spread: The spread is the difference between the bid and the ask price of a certain currency pair. The tighter this spread is,
the more profitable a trade can be and the more favorable it is for the trader. Several years ago spreads for the most active and liquid
currency pairs such as EUR/USD, GBP/USD, USD/CHF and USD/JPY could have been as large as 10 pip and even more depending on the
currency pair. Today, depending on the forex broker, you can trade these pairs with as low as a 2 pip spread!
- Account size: Many years ago you would need a very large amount of money in order to start trading the forex spot market.
Today, many online forex brokers will allow you to open an account with them with as little as USD $300 (some with less).
Forex Markets
These are just some of the perks that have arisen as a result of the fierce competition amongst online forex brokers. As you can see,
the forex market has opened it's doors for everyone regardless of size. With this many opportunities have come and will come in the near future.
Hope you enjoyed this short article and I wish you all the best in your trading,
Avi Frister
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