Electronic trading platform

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Electronic or scripless tradingsometimes called e-trading or paperless trading is a method of trading securities such as stocksand bondsforeign exchange or financial derivatives electronically. Information technology is used to bring together buyers forex trading system wikipedia sellers through an electronic trading platform and network to create virtual market places. Electronic trading is in contrast forex trading system wikipedia older floor trading and phone trading and has a number of advantages, but glitches and cancelled trades do still occur.

For many years stock exchanges were physical locations where buyers and sellers met and negotiated. Exchange trading would typically happen on the floor of an exchange, where traders in brightly colored jackets to identify which firm they worked for would shout and gesticulate at one another — a process known as open outcry or pit trading the exchange floors were often pit-shaped — circular, sloping downwards to the centre, so that the traders could see one another.

With the improvement in communications technology in the late 20th century, the need for a physical location forex trading system wikipedia less important and traders started to transact from remote locations in what became known as electronic trading.

Set up inNASDAQ was the world's first electronic stock market, though it originally operated as an electronic bulletin board [ forex trading system wikipedia needed ]rather than offering straight-through forex trading system wikipedia STP. By investment firms on both the buy side and sell side were increasing their spending on technology for electronic trading. Traders also increasingly started to rely on algorithms to analyze market conditions and then execute their orders automatically.

The move to electronic trading compared to floor trading continued to increase with many of the major exchanges around the world moving from floor trading to completely electronic trading.

While the majority of retail trading in the United States trading economics japan current account to gdp over the Internet, retail trading volumes are dwarfed by institutional, inter-dealer and exchange trading. However, in forex trading system wikipedia economies, especially in Asia, retail trading constitutes a significant portion of overall trading volume [8].

For instruments which are not exchange-traded e. US treasury bondsthe inter-dealer market substitutes for the exchange. This is where dealers trade directly with one another or through inter-dealer brokers i. They acted as middle-men between dealers such as investment banks. This type of trading traditionally took place over the phone but brokers moved to offering electronic trading services instead. Similarly, B2C trading traditionally happened over the phone and, while some still does, more brokers are allowing their forex trading system wikipedia to place orders using electronic systems.

Many retail or "discount" brokers e. Charles SchwabE-Trade went online during the late s and most retail stock-broking probably takes place over the web now. Larger institutional clients, however, will generally place electronic orders via proprietary electronic trading platforms such as Bloomberg TerminalReuters XtraThomson Reuters EikonBondsPro, Thomson TradeWeb or CanDeal which connect institutional clients to several dealersor using their brokers' proprietary software.

For stock trading, the process of connecting counterparties through electronic trading is supported by the Financial Information eXchange FIX Protocol.

Used by the vast majority of exchanges and traders, forex trading system wikipedia FIX Forex trading system wikipedia is the industry standard for pre-trade messaging and trade execution. While the FIX Protocol was developed for trading stocks, it has been further developed to accommodate commodities, [9] foreign exchange, [10] derivatives, [11] and fixed income [12] trading.

For retail investors, financial services on the web offer great benefits. The primary forex trading system wikipedia is the reduced cost of transactions for all concerned as well as the ease and the convenience. Web -driven financial transactions bypass traditional hurdles such as logistics. Exchanges typically develop their own systems sometimes referred to as matching enginesalthough sometimes an exchange will use another exchange's technology e. Exchanges and ECNs generally offer two methods of accessing their systems —.

From an infrastructure point of view, most exchanges will provide "gateways" which sit on a company's network, acting in a manner similar to a proxyconnecting back to the exchange's central system. Many brokers develop their own systems, although there are some third-party solutions providers specializing in this area. Some banks will develop their forex trading system wikipedia electronic trading systems in-house, but this can be costly, especially when they need to connect to many exchanges, ECNs and brokers.

There are a number of companies offering solutions in this area. Many types of algorithmic or automated trading activities forex trading system wikipedia be described as high-frequency trading HFTwhich is a specialized form of algorithmic trading characterized by high turnover and high order-to-trade ratios.

From Wikipedia, the free encyclopedia. Not to be confused with E-Trade. This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. September Learn how and when to remove this template message. Retrieved 29 October The Wall Street Journal.

The New York Times. Retrieved July 8, Retrieved October 4, A Report on the 9. Archived from the original on Retrieved from " https: Financial markets Stock market E-commerce Electronic trading systems.

Articles needing additional references from September All articles needing additional references All articles with unsourced statements Articles with unsourced statements from October Views Read Edit View history. This page was last edited on 1 Decemberat By using this site, you agree to the Terms of Use and Privacy Forex trading system wikipedia.

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Foreign exchange fraud is any trading scheme used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. Currency trading became a common form of fraud in early , according to Michael Dunn of the U. Commodity Futures Trading Commission.

The foreign exchange market is at best a zero-sum game , [2] meaning that whatever one trader gains, another loses. However, brokerage commissions and other transaction costs are subtracted from the results of all traders, making foreign exchange a negative-sum game. Frauds might include churning of customer accounts for the purpose of generating commissions, selling software that is supposed to guide the customer to large profits, [6] improperly managed "managed accounts", [7] false advertising, [8] Ponzi schemes and outright fraud.

Commodity Futures Trading Commission CFTC , which loosely regulates the foreign exchange market in the United States, has noted an increase in the amount of unscrupulous activity in the non-bank foreign exchange industry. The foreign exchange market is a zero sum game [2] in which there are many experienced, well-capitalized professional traders e.

An inexperienced retail trader will have a significant information disadvantage compared to these traders. Retail traders are, almost by definition, undercapitalized. Thus, they are subject to the problem of gambler's ruin: In some variations of forex trading, the customers do not obtain normal fungible futures, but instead make a contract with some named company.

Even if the company claims to act as their "forex dealer", it is financially interested in making the retail customer lose money. The contract is directly between the customer and the pseudo-dealer, so it is an off-exchange one; it cannot be normally registered and traded on futures exchanges. Although it is possible for a few experts to successfully arbitrage the market for an unusually large return, this does not mean that a larger number could earn the same returns even given the same tools, techniques and data sources.

This is because the arbitrages are essentially drawn from a pool of finite size; although information about how to capture arbitrages is a nonrival good , the arbitrages themselves are a rival good. To draw an analogy, the total amount of buried treasure on an island is the same, regardless of how many treasure hunters have bought copies of the treasure map.

By offering high leverage some market makers encourage traders to trade extremely large positions. This increases the trading volume cleared by the market maker and increases their profit, but increases the risk that the trader will receive a margin call. While professional currency dealers such as banks and hedge funds tend to use no more than To aid with transparency, some regulatory authorities publish in to public domain the following: From Wikipedia, the free encyclopedia.

Archived from the original on The Economics of Foreign Exchange. Retrieved 17 December Then Multiply by ". The New York Times. Scams and confidence tricks. Confidence trick Error account Shill Shyster Sucker list. Con artists Confidence tricks Criminal enterprises, gangs and syndicates Email scams Impostors In the media Film and television Literature Ponzi schemes. Benefit Electoral Medicare Visa Welfare. Retrieved from " https: Foreign exchange market Finance fraud Scams Cyberbullying.

Webarchive template wayback links. Views Read Edit View history. This page was last edited on 20 January , at By using this site, you agree to the Terms of Use and Privacy Policy. Currency band Exchange rate Exchange-rate regime Exchange-rate flexibility Dollarization Fixed exchange rate Floating exchange rate Linked exchange rate Managed float regime Dual exchange rate. Foreign exchange market Futures exchange Retail foreign exchange trading.

Currency Currency future Currency forward Non-deliverable forward Foreign exchange swap Currency swap Foreign exchange option. Bureau de change Hard currency Currency pair Foreign exchange fraud Currency intervention.