Introduction of Electronic Trading in the Forex Market

Through the introduction and development of technology the operations in the forex market have been greatly facilitated. Before this, the operations were conducted via phone or telex machines. Additionally, the previous two-way voice brokering, which was later replaced by electronic means, represented a two-way process conducted between interbank brokers.

Disadvantages of the old system include:

• Slow speed
• Susceptibility to errors
• Discrepancy between prices among brokers

The old system required the execution of small parts of transactions. This was needed not only for profit acquisition, but also for the dealers to keep a closer look on the rates at which currencies were traded.

However, with the introduction of various electronic technologies, the old means of executing trades has eliminated the need of voice brokering. The new systems are more beneficial than old ones in terms of cost saving and higher efficiency.

The first electronic system was introduced by Reuters. It immediately proved its efficiency since communication between foreign exchange brokers was greatly enhanced. However, it had a drawback, namely it didn't include the possibility of matching of potential counterparts. This negative trait was fixed by Reuters through the introduction of an improved system, which allowed for the automatic matching of sell and buy quotes.

Later, various other electronic systems were introduced with many additional capabilities. They allowed for the matching of orders. This resulted in more reliable and faster systems. Additionally, now traders can execute many different trades concurrently, which was not the case with the old system.

To be successful at forex trading you need two main things - the knowledge and the right trading plaftorm. For a trading platform we can recommend you Easy Forex. It offers unique features such as Inside Viewer™, which will give you a unique insight of what other traders are doing, competitive spreads, 24/7 support, etc. Start trading from as little as $25.

Bookmark this page :