FXCM Insights

Who Makes Money Online?

Internet technology has connected the world in an unprecedented fashion. The ability to transfer information at near light-speeds has revolutionised communication creating an exclusively digital space.

Perhaps the largest application of this technology has been in the arena of commerce. Producers, retailers and consumers can now interact via online platforms 24 hours a day, 7 days a week. Given that more than 3 billion people worldwide access the internet regularly, the money making potential is seemingly boundless.1)Retrieved 19 September 2017 http://www.bbc.com/news/technology-32884867

The global financial markets have been receptive to the rapid advancement of internet connectivity. Once existing as only brick-and-mortar institutions, every prominent financial venue in the world now functions in an online capacity. This has given rise to several potentially lucrative market-related professions:

Each of these disciplines adds value to the online financial environment while generating revenue in the process.

Active Traders And Investors

The active trading and investing of financial securities is one of the most popular ways of making money online. Currencies, equities, futures and options are a few of the most commonly addressed products in the pursuit of profitability.

The vast number of traders execute day-to-day operations remotely in an independent capacity. Given that most markets are easily accessed via software platform, it stands to reason that the overwhelming majority of these participants are doing so online. A 2015 study projected 54 million out of a total 90 million investors in the United States functioned as self-directed online traders.2)Retrieved 23 September 2017 https://www.forbes.com/sites/kumesharoomoogan/2016/06/02/more-investors-striking-out-on-their-own-what-does-all-this-self-directed-trading-mean/#127aec1c4db6

Online traders and investors fall under two primary classifications:

The compensation structure for each type of trader is vastly different. Independent retail participants realise gains directly from the growth of their account balance. The money made by retail traders can vary wildly. As a general rule, however: the larger the account, the greater the potential returns.

Depending on the position, professional traders may receive compensation according to a predetermined salary or commission-based structure.

Brokerage Services

Online brokerage services afford traders and investors market access in return for a specified compensation structure. In the days before the rise of the electronic marketplace, revenues for brokerages firm depended on high commissions and fees associated with the provision of a full-service suite to the customer.

Today, the digital marketplace has revolutionised the role of brokerage firms. Costs associated with conducting business have reduced dramatically. As a result, brokerages secure profits according to a volume-based business model:

Market Analytics

The online platform has brought a wide-range of opportunities to market analysts. The growth of active trading as a discipline created an abundance of new traders seeking viewpoints and opinions from experienced professionals.

In place of the traditional newsletter, many forms of digital media analyse the markets and provide content on a 24/7 basis:

Summary

The growth of electronic trading has dramatically increased both the size of markets and the related industries. While the utility of that expansion is a frequently debated topic, it is undeniable that opportunities to profit in the online financial arena have matured exponentially.

Any opinions, news, research, analyses, prices, other information, or links to third-party sites are provided as general market commentary and do not constitute investment advice. FXCM will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

Risk Warning: Our service includes products that are traded on margin and carry a risk of losses in excess of your deposited funds. The products may not be suitable for all investors. Please ensure that you fully understand the risks involved.

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