Forex Investment and Currency Trading

When using an online trading platform, entering a position is as easy as making a few simple mouse clicks. At the same time, the simplicity and speed of online trading platforms make those simple mouse clicks a done deal that puts your trading capital at risk.

That’s why it’s important to understand from the get-go that any action you take on a trading platform is your responsibility. You may have meant to click Buy instead of Sell, but no one knows for sure except you.

If do make a mistake, correct it as soon as you discover and confirm it. Don’t try to trade your way out of it. Don’t try to manage it. Don’t’ start rationalizing that it may work out anyway. No trader is errorproof, and you’re bound to make a mistake someday. Just cover the error and get your position back to what you want it to be. Covering error is one of the few hard-and-fast rules we subscribe to in trading any market.

Buying and selling online

Most every online trading brokerage now provides for click-and-deal trade execution. Click and deal refers to trading on the current market price by clicking either the Buy button or the Sell button in the trading platform. Before you can click and deal, you have to:

• Select the right currency pair

This may sound silly, but make sure you’ve selected the currency pair that you actually want to make a trade in. when the market gets hectic, and you’re switching between your charts and the trading platform, you could easily mistake EUR/USD for EUR/CHF if you’re not careful. This can also happen when different currency pairs are trading around similar price levels. If EUR/USD is trading at 30/33 and USD/JPY is trading at 31/35, it’s easy to home in on the price and overlook the big figures, which would tell you you’re in the wrong pair.

• Select the correct trade amount

Make sure you’ve specified the correct amount you want to trade. Different platforms have different ways of inputting the trade amount. Some use radio buttons, others use scroll-down menus, and others allow you to type the amount manually. When the trading is fast and furious, make sure your selecting has been properly registered on the platform. Some trading platforms allow you to customize your default trade sizes in advance, so you’re able to simply click and deal on the currency pair of your choice.

• Double-check your selections

Remember: This is your money; be certain now or be sorry later. In case you think input errors can’t happen to you, think about the equity trader at a New York investment bank who meant to sell 10 million shares of a stock but ended up entering 10 billion. By the time the trade was stopped, the system had sold several hundred million shares! Ouch.

• Click Buy or Sell

Be sure you know which side of the price you want to deal on. If you want to buy, you’ll need to click the higher price – the trading platform’s offer. If you want to sell, you’ll have to click the lower price – the platform’s bid. Most platforms have labeled the sides of the prices from the user’s perspective, so the bid side will be labeled Sell, and the offer side will be labeled Buy.

After you’ve clicked Buy or Sell, the trading platform will confirm whether your trade went through successfully, usually within a second or two. If your trade request went through, you’ll receive a confirmation from the platform. Double-check your position, and make sure it’s what you want it to be.

If the trading price changed before your request was received, you’ll receive a response indicating “trade failed”, “rates changes”, “price not available”, or something along those lines. You then need to repeat the steps to make another trade attempt.

Attempts to trade at the market can sometimes fail in very fast-moving markets when price are adjusting quickly, like after a data release or break of a key technical level or price point. Part of this stems from the latency effect of trading over the Internet, which refers to time lags between the platform price reaching your computer and your trade request reaching the platform’s server.

If you’re continually getting failed trade response, it may be due to the speed of your Internet connection, which is preventing your trade requests from getting to the trading platform in a timely way or delaying the incoming prices you’re seeing so that they’re always behind the real market.

Whatever the outcome of your trade request, you need to be sure you’ve received a response from the trading platform. If you have not gotten a response back after more than a few seconds, you need to call your broker immediately and confirm the status of the trade request. The deal may have gone through, but confirmations may be delayed due to processor slowness. Or the trade may have never been received by the trading platform because your computer lost its Internet connection.