Electronic Trading
This kind of trading is a means by which people from all over the world can come together for business through the internet. It allows trading of stock, foreign currency, etc. between people in cyber space as an effective transaction. The markets available online include- NASDAQ, NYSE Arca and GLOBEX.
These online markets provide all kinds of transaction opportunities which are far simpler to process than a transaction in person, as was done earlier.
There are two types of trading done online:
- Business to Business trading is when brokers or banks trade directly with one another with large transactions being executed.
- Business to Client trading occurs when individuals execute transactions with the big companies indirectly with the help of brokers or dealers.
The growth of the E-trading world has caused a lowering of prices as it is a direct process thus eliminating all additional costs. It has also caused a growth in the market as more people can freely interact and trade with one another, however, this also leads to more competition, for the same reason. There is also more lucidity in the markets as anyone can find out prices and offers prevalent.
E-trading is accessible in two ways:
- One could get an exchange provided GUI to run on their desktop which is connected to the Electronics Communication Network or ECN.
- One could use an API which directly connects ones house system to the ECN. Sometimes the trading is not even transacted by humans but by intricate algorithms.
