Forex trading online is a relatively new way to start trading forex, with the basic concept being that you can trade currencies on your own without having to meet up with a broker. They typically offer lower fees and more availability as well as online chat rooms and account access.
If you are already familiar with forex trading, then it would make sense to use an online broker instead due to the convenient nature of this type of trading.
Yes, there are some benefits such as lower fees and more availability but not much has been written about the negatives of using an online platform for forex trading online which can be complex for beginners who don’t know how to read charts or understand how technical indicators work. Because you are trading online, you will have less control over the trades that you make.
New traders should be aware
A lot of online brokers market their platforms toward newer traders who might not understand the risks and nature of forex trading. For example, a beginner trader who wants to use an online platform to buy or sell currencies may only have 1-10k in their account at max.
Online brokers know this so they offer leverage or margin which allows him to trade with as much as 100:1. In other words, he can buy 1,000 Euros for only $100. If the price in the market of Euros is rising then he can quickly make a lot of money. However, if the price goes down then his entire $100 may be put on the line.
Most beginner traders don’t fully understand leverage and the risks it brings to trading so they assume that they will never lose any money. Even though this is true in theory, it doesn’t mean that you can make a profit from this type of 100:1 leverage trading because of all of the commissions that you will have to pay online which will eat into your profits over time which most beginning traders don’t know about.