Online trading represents the trading of fiat currencies, digital currencies, commodities, stocks and indices, where traders and investors intend to make a profit, via the purchase or sale of the aforementioned products.
This is done through an electronic network, made accessible by brokers in the form of an online trading platform or hub.
Online trading continues to see a rapid growth year on year, due to a number of reasons.
Firstly, the number of brokers offering their services, with more money being spent on advertisements and sponsorships to attract potential traders.
Secondly, more traders are aware of the ease in applying for online accounts; the low barrier to entry now means a trader only needs to deposit virtually as little as one wants in order to places trades.
Thirdly, the improvement of financial technology, better performing hardware and software, leading to quick and consistent execution, which in turn is helped by higher liquidity, and reduced trading costs such spreads and commissions, have fueled the retail trading industry immensely.
How to Trade Online?
Before the emergence of the Internet, traders would have to place trades over the phone, which could be rather cumbersome, especially if one wanted to place multiple trades in a short space of time.
Indeed, online trading has opened a new field of trading in the form of foreign exchange scalping, whether manually, or by way of automated trading robots.
An example of online trading is the trading the foreign exchange market with a forex broker, using a platform which the broker will provide.
The trader installs the platform on their computer, and they are given the information and tools needed to start trading.
The most common online retail platform for forex trading is known as MetaTrader 4 (MT4).