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© 1st Forex Trading Academy 2004
14
Introduction
Benefits of Online Investing
Online trading has caused a major paradigm shift in investing. At the turn of the millennium, there 
are over 6 million online investment accounts, up from 1.5 million in 1997. As a result, start-up 
firms now compete directly with financial institutions to serve investors in the new Economy, and 
the clear winner is the customer. The competition between the brick and mortar institutions and 
the Internet-based companies has dramatically lowered the costs of investing, and empowered the 
individual investor to take control of their own investment strategy. 
On-line trading will revolutionize the currency markets by making it accessible to the small and 
medium sized investor. For the first time, these investors have the ability to execute transactions 
of between $100,000 and $10,000,000 at the same prices the Interbank market offers for deals well 
over $10,000,000. This benefits both those who wish to speculate on the direction of the currency 
markets for profit, as well as the money manager or corporate treasurer looking to hedge against 
unwanted exposure to future price fluctuations in the currency markets.
Benefits of Trading FX on the Internet
• Deal directly from live price quotes 
• Instantaneous trade execution and confirmation 
• Fast and efficient execution of deals 
• Lower transaction costs 
• Real-time profit and loss analysis 
• Full access to market information 
Deal directly from live price quotes
Very few on-line brokers are able to offer their clients real-time bid/ask quotes, which facilitates 
instantaneous deal execution - no missed market opportunities. Real-time prices also allow investors 
to compare an on-line broker’s dealing spread with that of other pricing services, to ensure they are 
receiving the best possible price on all their Forex transactions.
Many on-line Forex brokers require their clients to request a price before dealing. This is 
disadvantageous for a number of reasons, primarily because it significantly lengthens the execution 
process from just a few seconds to possibly as long as a minute. In a fast paced market, this could 
make a significant difference in an investor’s profit potential. Also, some of the more unscrupulous 
brokers may use the opportunity to look at an investor’s current position. Once they have determined 
whether the investor is a buyer or a seller, they ‘shade’ the price to increase their own profit on the 
transaction.
Instantaneous trade execution and confirmation 
Timing is everything in the fast-paced Forex market. On-line trades are executed and confirmed 
within seconds, which ensures that traders do not miss market opportunities. Even the incremental 
extra time it takes to complete a transaction over the phone can mean a big difference in profit 
potential. 

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© 1st Forex Trading Academy 2004
15
Introduction
Lower transaction costs
Simply, executing trades electronically reduces manual effort, thereby lowering the costs of doing 
business. On-line brokers are then able to pass along the savings to their client base.
Real-time profit and loss analysis
The fast-paced nature of the Forex market compels traders to execute multiple trades each day. It 
is vital for each client to have real-time information about their current position in order to make 
well-informed trading decisions.
Full access to market information
Access to timely and relevant information is critical. Professional traders pay thousands of dollars 
each month for access to major information providers. However, the very nature of the Internet 
affords users free access to reliable market information from a variety of sources, including real-
time price quotes, international news, government-issued economic indicators and reports, as well 
as subjective information such as expert commentary and analysis, trader chat forums etc.
Benefits of Forex Trading vs. Equity Trading
• 24 hour trading 
• Liquidity 
• 50:1 Leverage to 400:1 Leverage
• Lower transaction costs 
• Equal access to market information 
• Profit potential in both rising and falling markets 
24-hour trading
The main advantage of the Forex market over the stock market and other exchange-traded 
instruments is that the Forex market is a 
true 24-hour market
. Whether it’s 6pm or 6am, somewhere 
in the world there are always buyers and sellers actively trading Forex so that investors can respond 
to breaking news immediately. In the currency markets, your portfolio won’t be affected by after 
hours earning reports or analyst conference calls.
Recently, after hours trading has become available for US stocks - with several limitations. These 
ECNs (Electronic Communication Networks) exist to bring together buyers and sellers when 
possible. However, there is no guarantee that every trade will be executed, nor at a fair market 
price. Quite frequently, stock traders must wait until the market opens the following day in order 
to receive a tighter spread.

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