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As the online forex trading market becomes increasingly saturated and the choice of brokers broadens, the decision of which broker to go with becomes increasingly important to the trader. Although most brokers offer the same basic trading platform, there can be a huge difference in what they offer to their clients, both in terms of trading conditions as well as customer support. It can be difficult to separate second-rate firms from professionals by simply visiting a company’s homepage, so this article will examine the main parameters that should be taken into account before creating an account and making a deposit.
account type
The decision of which type of account to open will most likely depend on how much capital you have to invest. Most brokerages offer two main account types: a “mini” ($100-$200 minimum deposit) and a “standard” account ($1,000-$2,000 minimum deposit). Small accounts are best suited for new or novice traders looking to gain market experience and confidence with smaller investments, and offer the high leverage you’ll need to make money with such little starting capital. “Standard” account holders can expect to enjoy a variety of leverage options, but will have to invest more funds for the privilege. Although not as commonly advertised, many brokers offer a premium service for larger investors (perhaps $100,000 – $250,000+), which includes additional VIP services, such as a dedicated fund manager and tailor-made terms.
Common to almost all online brokers is the offering of a demo account, which allows users to get a feel for the software and gain trading experience without the risk of market risk. Such simulations are undoubtedly beneficial to potential customers wanting to test the waters, but Emptor cautions: Despite claims of full functionality, they are not always representative of real-market, real-platform conditions. Don’t be afraid to question a brokerage on this matter – an honest, trustworthy broker will accept the decline of a demo account.
software idea
The Forex market can move at a fast pace and will often require you to make quick decisions and execute, no matter where you are. Depending on your level and frequency of trading, as well as travel habits, it may be wise to choose a brokerage that offers a web-based Java trading platform, which requires no download and allows you to trade anywhere in the world. Enables you to do business from anywhere.
payment options
Look for brokers who allow you to make credit card payments, as this is by far the easiest option and does not involve the need to transfer funds from an online e-account. Other commonly offered payment options include wire transfer, which is just as secure as a credit card, but expect to wait several days for it to clear and access your funds.
Help
Perhaps one of the most important considerations and one that can potentially have a significant impact on your trading success is the issue of customer support. Whether you are a first time forex amateur or an FX vet, the support and advice of a reliable, dedicated customer service team is undoubtedly invaluable, so it would be prudent to do your homework on this. The only way to assess the quality of a support team is to contact them and see how they handle your inquiries: are they fast, do they provide reliable technical and market advice; Do you get the impression that they know the industry well enough to offer advice to others, or are they just good sales people? It may not be that easy to find out, but as the only point of contact between you and the brokerage, it is important to do so. As is the case with any business, pre-sales service may be more satisfactory than after-sales, so again, try to decide whether you are being helped or simply pitched. Yes or No.
Platforms, Tools and Analytics
It is rare to find a company in the current online market that does not offer real-time tools such as charting and price updates, but predictably the quality and availability of such applications will vary from broker to broker. Ideally you should have access to a wide range of tools, so that you can assess the market 24 hours a day, make your own trading decisions, and in addition your broker should also provide you with daily market reports, which are professional Prepared in-house by analysts. , These reports should cover the basics: economic news relevant to major currencies, technical movements, and general commentary. Better known, more reputable analysts publish their reports on many of the larger online forex portals and forums, which is an indication that their data is considered accurate and reliable, which in turn can tell you a little more about the credibility of the brokerage. tells. on one’s own.
As mentioned earlier, many trading platforms offer the same basic functions, but not all brokers cover all areas of the forex market, so make sure before buying that your chosen platform supports the currency pairs you need. Will do business
spreads
Spreads are an important factor to consider before investing and will definitely require some shopping around to find the best offer that suits your trading habits. The spread is the difference between the price at which a currency can be bought and the price at which it can be sold at any point in time. FX brokers do not charge a “commission”, so there is a difference in how they make their money; Therefore, the lower the spread, the lower the commission, and unlike stocks, currencies are not traded through a central exchange, so spreads can vary from broker to broker. Spreads vary by account type, with mini accounts being 1.5-2 times higher than the spreads offered for standard accounts, which in turn are higher than for large volume traders with VIP status.
“Fixed” spreads remain the same day or night, regardless of market conditions, and although they are usually somewhat wider than the narrowest part of variable spreads, they offer a slightly higher degree of predictability and a slightly lower can be secured in the long run by providing risk level. “Variable” spreads change according to market conditions (which may initially be attractive during a quiet period, but once the market becomes busy, they are likely to increase significantly, meaning that the market has to be traded). Must move significantly in your favor before profit is turned).
leverage
Unless you intend to invest six figures of capital, the use of leverage will be essential to making decent profits in forex. Typically, the amount of money made during a successful trade is only a fraction of a cent per unit, so if you are buying lots worth a few thousand dollars or less, your profit will be minimal. This is where leverage comes into play: temporarily “borrowing” your broker’s funds will enable you to place larger trades that, if everything goes according to plan, will result in huge profits. Obviously, this practice involves an inherent risk: If the market turns bad, you risk losing a substantial amount of money, depending on the amount of leverage. For this reason it is advised to do some further reading on leverage and margin before using leverage, so that you are fully informed before exposing yourself to the open market. Under normal market conditions, some common currency pairs are generally less volatile, and may warrant a higher level of risk-taking, while more exotic currencies may not be sufficiently predictable and require traders to be involved with such pairs. If so, it would be advisable to use less leverage. Mini accounts offer the highest level of leverage, with some brokers offering up to x 400.
Education
While practicing on a demo account can help you improve to some extent and trading with real money can give you some hard-learned lessons, it is important to improve your trading ability and build yourself a solid knowledge base. The best way to provide is to educate yourself. To this effect, more and more online brokers are offering trading courses or tutorials, ranging from the free five-minute “Introduction to Forex” to courses covering the tiniest of details and costing thousands of dollars. Well-established educational centers like Online Trading Academy (OTA), with years of technical training experience, are your best bet, providing solid instruction that will not only teach you the basics of the market, but also the technical side of trading (advanced technical analysis, charting, chart reading, Fibonacci calculation etc). Some brokerages create their own courses in conjunction with such trading centers, such as the courses offered by ForexYard. Without educating yourself, most of the market tools offered by trading platforms will be wasted on the amateur forex trader.
In short, there are many factors to consider before choosing the right online forex broker, all of which should be researched to ensure that your trading account and broker will allow you to get the most from your investment. You should be aware that some brokers may not have your best interests in mind, but do not despair, as there are many reputable and reliable companies eager and capable of providing a professional service. As part of your research, be sure to visit the many online trader forums where you can discuss any of the issues raised in this article with other traders, many of whom have already gone through the process of choosing a broker. Will be and will be able. To advise you from my experiences.
article written by foreign currencyYardstick.
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