MARKET EDUCATION
October 2025
What Is Online Trading?
Many investors who want to make money in financial markets ask what is online trading and what is trading in exchanges in general.
This guide defines trading, explains key concepts, and clarifies how you can start trading the financial markets.
Forex Education
Getting Started
Department
Research & Education
Category
Forex Trading
Author
One Trading Markets Academy
Definition of Trading: What Is Trading?
The term “trading” simply means “exchanging one asset for another.”
It usually refers to exchanging financial instruments—in other words, buying something for money. You buy a financial asset at one price and sell it later at another—ideally higher—so you make a profit.
When we speak about trading in financial markets, the principle is the same. Think of stock trading: you buy a company’s shares for money. If the value of those shares increases, you make money by selling them at a higher price. That is trading.
Why do shares rise in value? Primarily due to supply and demand—the more people want something, the more they are willing to pay. Another reason is company financial reports and earnings, plus material news that affects share prices.
What Is Online Trading?
Online trading is buying and selling different financial assets via a trading account with an online broker, without going to a physical exchange—using an electronic trading platform that gives you direct access to markets to place buy and sell orders.
For a long time, electronic transactions occurred only between banks and financial institutions, meaning market access was closed to those outside. With the growth of the internet, anyone who wants to trade can now do so online.
Today there are many online brokers accessible with very small capital. These companies provide a trading platform that lets you connect to the market in real time, place orders, view and analyze live charts.
Almost anything can be traded online: stocks, currencies, commodities, and a wide range of other instruments. For now, remember: if you want to trade something specific, it’s likely possible.
Thus online trading is possible anywhere you have internet access and a trusted electronic trading platform.
What Is Currency Trading (Forex)?
Currency trading is the same as trading on the foreign exchange (Forex) market—the largest financial market in the world with daily turnover above $6 trillion. Currency trading is buying and selling foreign currencies based on their exchange-rate moves to profit from these fluctuations.
If you’re asking “how do I trade currencies on electronic platforms?”—read on.
Simply put, Forex trading is speculating on currency price movements by buying one currency and selling another at the same time. Currency values rise and fall relative to each other due to economic, geopolitical, and technical factors.
Because Forex includes currencies from all over the world, the many drivers of price movement make exchange-rate forecasting challenging. Like most financial markets, Forex is primarily driven by supply and demand—so it’s important to understand these forces and how they cause price volatility.
There are two types of Forex markets:
Spot Forex: the physical exchange of currency pairs occurring at settlement time (immediately or shortly after).
Forex Futures: a contract to buy or sell a specified amount of currency at a set price, expiring on a future date (or within a future date range).
How Trading Works
There are different ways to participate in Forex trading, but they all work the same: buy one currency and sell another simultaneously.
Traditionally, Forex trading was done through a traditional broker, but thanks to online trading providers, you can now invest wherever you are.
Forex trading is an activity—if not a profession—of buying and selling currency pairs for anyone with a computer or mobile phone and internet access.
Trading happens daily and globally. Governments, companies, and individuals trade currencies every day. These exchanges occur through computer networks among traders worldwide. This is the main reason Forex (the currency market) is the largest and most liquid market in the world.
What Is the Base Currency?
The base currency is the first currency in the pair; the second is the quote (counter) currency. Forex trading always involves buying one currency and selling another, which is why they are listed as pairs.
A pair’s price states the value of one unit of the base currency in terms of the quote currency.
Currencies in a pair are identified by three-letter codes—usually the first two for the region and the third for the currency. The most common currencies available to traders:
USD (US dollar)
EUR (Euro)
GBP (British pound)
JPY (Japanese yen)
CHF (Swiss franc)
These form the major Forex pairs:
EUR/USD – GBP/USD – USD/JPY – USD/CHF
Most traders group currencies as:
Majors: seven pairs that make up ~80% of global FX trading, including EUR/USD, USD/JPY, GBP/USD, USD/CHF.
Minors: traded less frequently; typically majors excluding USD (e.g., EUR/GBP, EUR/CHF, GBP/JPY).
Exotics: one major currency versus a currency from a small or emerging economy (e.g., USD/PLN, GBP/MXN, EUR/CZK).
Regionals: pairs grouped by region (e.g., EUR/NOK, AUD/NZD, AUD/SGD).
Margin, Virtual Trading, Platforms & More
Margin Trading
Margin trading means trading with leverage. With leverage, the funds in your account allow you to invest much larger amounts than your cash balance.
What is margin? With 1:5 leverage, buying a $1,000 position requires only $200 margin (1000/5). Margin is the amount set aside for the transaction. While leverage can increase profits, it can also amplify losses and must be used carefully.
Virtual Trading (Demo Accounts)
Virtual trading means trading on a demo account with virtual funds in an environment identical to live trading but risk-free. It lets anyone test trading to see how orders would behave in real time. You can research stocks, analyze them, define entries/exits, and choose order types—just like a real account, but mirrored on a demo.
Record every detail of your operations—use a trading journal or spreadsheet. Treat it like live trading: decide when to buy/sell, analyze markets, and apply technical indicators to charts. Log outcomes to see how your decisions play out.
Trading Software (Platforms)
A trading program (platform) is the software/app used to trade online. It lets you view real-time charts and place orders. On the platform you’ll perform technical analysis to generate signals, place buy/sell orders, and configure stops and limits.
Beyond the basics, platforms often include news, built-in technical tools, automated strategy builders, and screening systems. Brokers generally allow you to test their platforms for free with a demo. It’s essential to test several platforms before committing to a broker.
Social Trading
As the name suggests, social trading is similar to a social network, but what’s shared are trading ideas. Traders connect, view others’ analysis, ideas, and results, and may use them to inform their own decisions.
Many social platforms include copy trading—you link your account and can automatically copy the trades of selected traders. Social trading can supplement your decisions, help you learn by observing, or let you benefit from others’ performance. Note that strategies and risk management vary from trader to trader and don’t always deliver desired results.
ECN Trading
ECN (Electronic Communication Network) trading is an automated system that matches buy and sell orders in the market. It connects major brokers and individual traders so they can trade directly without passing through a dealer, enabling investors in different regions to trade quickly and easily with each other.
ECN trading simply means trading online via an ECN broker.
Leverage Trading
Leverage trading is the same as margin trading. With leverage, brokers let you invest amounts greater than your account balance.
Example: with 1:5 leverage, you can invest five times what you hold. If you buy $10,000 of stock with 1:10 leverage, you need only $1,000 margin. Leverage can increase potential profit, but loss risk rises proportionally.
Algorithmic (Automated) Trading
Algorithmic trading executes orders using pre-programmed instructions that account for price, time, and size. An algorithm is a set of instructions to solve a problem. These systems send small slices of a larger order to the market over time.
Algo trading uses complex formulas, mathematical models, and human oversight to make buy/sell decisions on exchanges, often employing high-frequency trading techniques. It can be applied to many tasks, including pending and weighted orders and trend strategies.
Adoption grew after computerized trading entered US markets in the 1970s (e.g., NYSE’s DOT system in 1976). Over the decades, exchanges improved electronic capabilities and today most trades are executed by computers as part of algorithmic trading.
Conclusion
Trading lets you invest across different financial markets to grow your capital. It is, however, a risky investment style with no guarantee of success—so it’s essential to learn what trading is and the concepts around it.
Now that you know what trading is and several fundamentals, you can practice on a free demo with virtual funds. Once you learn how to trade, consider starting with a live account.
If you have more questions, our team will gladly help clarify anything unclear. Submit your details here, and one of our best advisors will contact you as soon as possible.
What Can You Trade Online?
With a reliable online broker and platform, you can access a wide range of markets in real time:
Currencies (Forex): major, minor, and exotic pairs
Stocks & ETFs: global equities and index trackers
Indices: broad market benchmarks (e.g., US, EU, APAC)
Commodities: energy, metals, and agriculture
Other instruments: depending on availability and regulation
In short, if there’s a market you want to trade, it’s likely available online through your broker’s platform—complete with charts, order types, and analysis tools.
