Regular currency trading: you're on your way to Canada. You stop at a place along the border, give the attendant a physical $100 bill, and in return they give you bunch of brightly color plastic rectangles and handful of coins with images of birds engraved on them. They say that stuff is worth $133 in Canada.
Electronic currency exchange involves the same concept, except you don't trade physical currency. Instead, it happens electronically.
In place of the kiosk just over a national border, you use an online brokerage account. Typically, electronic currency exchange takes place as part of currency trading (attempting to make money by speculating in foreign currencies) or when exchanging large amounts (like banks or major corporations making exchanges).
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Finance: What is Electronic Communicatio...12 Views
Finance a la shmoop what is the electronic communication network or ECN?
all right it's the computerized and wired version of this for a small fee [Large computer network]
traders can plug in to a network to trade stocks you know think about it
like Facebook for stock traders only with less political ranting and fewer
photographs of babies and freshly cooked meat generally well generally speaking [A pan of meat and potato's appear]
ECNs are "off-market" that is they aren't really directly part of
an established trading system like the New York Stock Exchange or Nasdaq or one
of the other blessed exchanges they connect market makers directly to third
parties allowing them to trade to their heart's content there aren't a lot of
actual physical hands at work here most of the limit orders are matched
electronically the network charges its fee the transaction is processed and [Company share price appears]
life moves on so think about it like it's 2:00 a.m. on a Saturday and Joe who
likes to trade in his underwear don't ask us why it's just dying to sell a [Joe sits down at PC]
hundred shares of coke to Betty who likes to trade while head-banging to Led
Zep and you know likes to trade with Achmed who's saving money for an air
conditioner yeah well no sweat so this is perfect for anyone who wants to
become active in the trading of stocks but hates any kind of physical human [Man waving to woman and woman walks by]
interaction yeah don't worry the robot rebellion will soon be upon us and ECNs
will rule the roost