Such factors, combined with the power of the Internet that transformed stock trading, have resulted in an explosion of online forex firms attempting to tap into retail and smaller institutional traders.
“As investors became more educated and more comfortable with [trading stocks online], they went off and traded,” says Jeff Hunter, president of online currency trading firm Oanda (www.oanda.com). “We’re hoping the learning curve that affected the boom of equities trading online will do the same for retail-based forex.”
However, there are different kinds of forex firms, and they are not necessarily equivalent to the broker dealers most online stock traders are used to. Because of forex’s unique regulatory status, the rules governing currency trading — and therefore the risks of this market — are unique.
This has nothing to do with the instruments themselves; currencies go up, down or sideways like any other market. It has everything to do with how traders access this market — that is, which broker dealer they do business with.
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