Concluding Remarks

It can be seen from the above that the foreign exchange markets are no longer the domain of large traders with multimillion dollar accounts and connections at large banks. The electronic forex revolution is here and is providing traders of all sizes legitimate options for trading foreign exchange. E-forex, or direct access trading of spot currencies, is now easier than ever and, like electronic trading of stocks, will be here to stay. It has the potential to revolutionize investment behaviour and provide more trading opportunities than ever before.

An average individual armed with a computer, a mouse and an Internet connection can trade spot foreign exchange literally 24 hours a day, 7 days a week. It seems that, overnight, an industry has sprung up to satisfy this market. Firms that did not exist one or two years ago are now growing rapidly. Such firms often provide free charts, signals, quotes, technical analysis, full simulation platforms and sometimes even financing to open an account. What was before the domain of the banks, corporations and funds is now accessible to everyone.

Just consider the leverage. E-forex trading can boast levels far higher than futures and certainly equities. It's common for trading platforms to offer 50-to-1 and 100-to-1 leverage, enabling trading of $100 000 worth of a foreign currency with only 2% or $2000 cash in the account.

While the Internet will play an increasing role in encouraging direct institutional and retail participation on the foreign exchange market, to date this has mainly been occurring through business-to-business solutions, notably proprietary electronic systems developed by banks that give clients access to their research and prices. However, the banks should be on their guard. Primary market makers, such as IFXMarkets Ltd, should be viewed as real competitors for the day-to-day business that exists in the foreign exchange Internet market.

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