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online trading opportunities


Today there are more online trading opportunities than ever before.  You can still trade currencies at traditional forex brokers. Now you can trade several new markets and many more instruments at the same brokers. Most recently the funded trading model, also called “Prop” trading, became globally very popular for under funded, "for income" traders.

Classic Forex Trading

Currencies, Gold & Oil

24/5 Market Access

CFD Characteristics

Margin Trading

Leverage

Go easily Long & Short

Low Trading Costs

Free platform, price feed

Free demo account

Free basic training

Trade own funds

Mostly under funded

Carry own losses

Profits per own capital

Strong regulation

Low systemic risk

Forex trading is not easy

New Markets

Commodities, indices, shares, crypto

Limited to market hours

CFD instruments

Margin Trading

Leverage

Go easily long & short

Low trading costs

Free platform, price feed

Free or paid demo account

Free basic training

Trade own funds

Mostly under funded

Carry own losses

Profits per own capital

Strong regulation

Low systemic risk

New markets don't make it easier

Funded Trading

CFD trading on many markets

24/5 & Limited hours

CFD instruments

Margin Trading

Leverage

Go easily long & short

Low trading costs

Free platform, price feed

Paid demo account

Free basic training

Trade demo for profit

Affordable fees

Demo losses

Profits per demo account size

Regulatory uncertainty

Some systemic risk

Funded trading doesn't make it easy

Classic Forex Trading (vs Online stocks trading)

Since the start of this century, forex trading has gained immense popularity, often compared to online stock trading. Online stock trading for individuals became possible based on the technological advancements during the 1990s. The popularity of day trading exploded due to specific characteristics of the stock markets during the buildup of the dotcom era. When the dotcom bubble burst it created a void which was quickly filled by the forex online trading industry. At that time forex trading was totally unregulated on the individual (day)trader) level.

It just embraced and adapted characteristics of the unique OTC (over-the-counter) institutional spot foreign exchange industry. Benefits of forex trading are still described differences with dotcom stock trading.

24/5 Market Access: Unlike the stock market, forex trading operates 24 hours a day, five days a week, allowing traders to participate when it suit them. This created opportunities to keep positions "overnight" from every timezone in the world and the global popularity of forex trading.

Low Capital Requirement: Forex trading doesn't require a large initial investment like a stock portfolio. Traders can start with modest capital and still operate effectively. However, in the very early days the minimum lot size was 100,000 units. Thus the "modest capital requirement" was possible only because it was margin based - like proprietary institutional trading. Today low capital requirements should be seen relative to the minimum lot size being a fraction of the original 100,000 units.

Flexible Trading Options: Traders can easily go long or short on currencies. Apart from providing opportunities in both rising and falling markets it allows for easy hedging of positions. A currency is always seen in terms of the value of another currency. This unique characteristic means you are always long a currency and short the other currency. Shorting stocks is not as straightforward.

Leverage Availability: Forex brokers offer high leverage, enabling traders to control much larger positions with a smaller amount of capital. This was quite important after the dotcom bubble burst. Due to the high leverage day traders who lost their shirt could trade 100,000 lots sizes with their the depleted remaining capital after the dotcom crash. Some stock brokers only offer 2:1 leverage based on the value of less volatile stock portfolios.

Low Trading Costs: The cost of trading in the forex market is relatively low compared to electronic stock trading through online brokers. Historically this due to narrow spreads and low commissions.

Comprehensive Tools and Resources: Forex brokers provide free tools, including unlimited demo accounts, charting and analysis software, and free price feeds. They also offer basic training, economic data release calendars and all sorts of trading related calculators.

Global Broker Presence: Forex brokers are now established worldwide, allowing traders to work with companies they can visit and maintain accounts in their home currency. In the early days they were mainly USA based, were initial regulations were not focused on the clients but on the brokers. Today global regulators are focused on the clients because of the high rates of losses.

Smaller Lot Sizes: The introduction of smaller lot sizes, from 100K to 10K and later to 1K led to lower minimum account sizes, making it easier to manage leverage risk.

These benefits still make the forex market an attractive entry point for online traders, offering flexibility, accessibility, and a wealth of resources to help traders succeed.


Trading New Markets

Forex trading became extremely popular due to its margin-based nature, allowing traders to use leverage. This meant that transaction sizes could be larger than the capital in the account, with the margin account only credited or debited with the profit or loss of a trade.

Nowadays, forex traders can access many new markets through their typical forex broker. This expanded access is made possible by a versatile trading instrument known as a CFD (Contract for Difference). A CFD shares the same margin-based, leveraged trading characteristics with forex, allowing traders to diversify their portfolios. With margin-based trading, all you need is a security deposit to cover potential losses, enabling you to trade in the many markets now offered by traditional forex brokers.

These markets include commodities like metals, oil, and natural gas, stock market indices, ETFs (baskets of stocks), single stocks (like Apple, Microsoft, and Meta), and even major and minor cryptocurrencies. Different markets have different margin requirements based on the expected volatility of the instruments.In essence, the flexibility and leverage that made forex trading so appealing have been extended to these new online trading markets, offering endless opportunities for traders to explore and capitalize on diverse financial instruments.


Funded Trading (vs self-funding)

Funded trading, popularly known as "prop" trading, is the latest development in online trading.

Limited Trading Capital

One of the biggest challenges for many traders has been a lack of sufficient capital. Limited funds often force traders to use high leverage, which significantly increases the risk of losing trading capital. This has been a major reason why many traders lose all the funds in their trading accounts.

In traditional forex trading, traders could start with a free demo account before moving at their own pace to a real money account funded with their own capital. Forex brokers typically offer demo accounts loaded with $100,000, $50,000, or $10,000. The psychological impact of making large nominal gains in the demo account often leads traders to attempt replicating these gains with higher leverage on much smaller real accounts, resulting in higher losses relative to their self funded account. They may then adjust their strategy, make new deposits, and trade smaller positions, but often still with too high leverage, leading to inevitable larger percentage losses. There is an intangible cost to this repetitive process. Becoming more risk-averse after large losses impacts a trader's psychology, mentality, and will to continue.

The bottom line is that traders generally don’t have enough capital to trade successfully relative to their goals, which usually are to make significant revenue from their trading.

Funded Trading Addresses This Problem

Effectively, the new type of prop trading firms sell a demo account, for a small fee relative to the funding (capital amount) of the account. The capital amount can be as much as 200X of the fee. Before traders can start earning they have to pass an evaluation by making target profits while limiting losses. However, traders are not responsible for losses. These rules apply to both the test and real money trading phases. The only downside is that by exceeding the loss limits the trader must start over right from the beginning.

Disrupting the Classic Forex & CFD Business Model

This innovative model has disrupted the classic FX and CFD trading landscape, prompting FX brokers to integrate it alongside their traditional self-funded trading accounts. By reducing the risk associated with personal capital and offering a structured path to trading real funds, prop trading has opened new doors for traders seeking higher revenue. The involvement of regulated traditional forex brokers in the funded trading model is a huge positive for the industry.

Trading Success Remain Elusive

Unfortunately most traders underestimate how difficult successful trading is. One part of the problem is that traders look for easy ways to make big profits super quick. Another part of the problem is that forex & CFD brokers as well as "prop firms" exploit this mostly unachievable objectives of rookie traders.

Basic informational education is not training to trade sustainably and profitably. There is absolutely no educational benefit in trading communities like YouTube channels, discord servers and other social media platforms. Some are just "influencers" for trading firms. Others only parade one or two profitable trades the made in the very short term. Others parade theoretical profitable intra-day technical analysis techniques. Firstly, what they offer is totally unstructured and, most importantly, they don't address the individual in his / her specific situation.

In the background the trading providers (FX brokers and prop firms) eagerly await a never ending stream of rookies to pay their fees for a funded account or fund their under capitalized own account.

Finally, traders should take responsibility for falling hook, line and sinker for the "training / mentoring" offered by their counter party. Traders should accept if they don't pay their school fees, don't do the hard yards and don't tone down unrealistic expectations, sustainable profitable trading will always remain elusive for them.

Learn more about personal mentoring (link to training page)


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