The world of foreign currency exchange is huge, and with literally trillions of dollars exchanging hands daily, it is not surprising that so many people are now getting involved in this lucrative field. With the need for information reaching a boiling point, forex brokers have created a huge market where almost everyone has access. These brokers have databases full of information on both sides of the trade, which they charge a fee for. Many of these online forex brokers are available twenty-four hours a day, seven days a week – which means that investors can be rest assured that they will always be able to find relevant information no matter what time it is.
To begin with, to get a real account with any forex brokerage firm is a little bit like opening an offshore bank account in a different country. It takes extensive paperwork and procedures, including identity verification. The whole process can take several days.
But, when you are looking for a platform to test the waters with, forex brokers generally offer demo accounts for which all you have to give is minimal information, which is uploaded onto the platform by the broker in question.
Before you get started, you must know something about forex trading accounts and the available various types of leverage. For instance, most brokers allow you to use only ‘major’ worldwide currencies. Usually, this is the currency that is most widely traded. You are then given the option of either buying or selling the currency using a certain level of leverage.
This level of leverage can be increased as you go along, but you are limited to leverage of one percent of the total value of the foreign exchange currency being traded. This is referred to as a ‘Leverage Factor’ and is one of the factors used to evaluate forex brokers based on customer service.
Another factor that can help you determine which brokers are a good fit for your trading requirements is the kind of spreads that they offer. Many brokers will charge a fee for the privilege of having multiple-asset trades, where you can trade in the same way as you do with single-asset trades.
While this is a great platform if you do not mind carrying extra money, you may find that other brokers have much more attractive spreads that you may find convenient or even appealing.
A third consideration that you need to make before signing up with a forex brokerage firm is whether or not they have any ‘trend indicators’. These are technical analysis tools that signal when the currency pair has reached a particular peak or low and how quickly it can move upwards or downwards. Some forex brokerage firms include these indicators as part of the platform; others do not, but this aspect of customer service can make a big difference to your trading experience.
Finally, ask about the trading platform itself. Forex platforms are designed to simplify the process of trading currencies. The software provides a simple graphical interface that allows traders to enter trade orders and provides a mechanism to indicate when a trader’s order should be executed.
Some platforms are designed so that traders can monitor currency pairs through their screens, while others are primarily text-based. Either way, the primary function of the platform is to facilitate the entry and exit of trades. If the platform does not provide easy-to-use controls and information or does not allow traders to get information from other screens, the forex broker may not be a great choice for you.
Forex Brokers – Determining Which One is Right for You
When looking for the best South african forex brokers, you can only choose the one that fits your needs best. These brokers can offer different services and charge different fees. You will need to consider the following when comparing the offers of forex brokers: liquidity, fees, advice, and tips. Forex brokers get their commissions from forex traders who make transactions with their firms.
Regulated vs. Unregulated – There are many more brokers in the market today that is unregulated. These brokers are not regulated by any government bodies and therefore are not subject to the same rules and regulations as regulated brokers are. Brokers can be connected to futures and options markets, commodity markets, and even stock markets. All regulated brokers work under the supervision of federal government agencies.
Liquidity – How liquid does the forex brokers trade? A good broker should be able to execute trades in a timely fashion. In other words, you should be able to execute a trade with confidence. Remember, any investment that you make must be able to be converted to cash promptly. Brokers have access to the capital of many financial institutions and companies. If a broker cannot convert your investment into cash, then you may want to consider another broker.
Leverage – This is an area that most beginners should focus on when comparing the best forex brokers. Forex traders are typically encouraged to use larger leverage than they might at traditional stock brokerage firms. This is because forex brokers receive payment, in most cases, in the form of commission, from large institutional investors. This means that forex traders can enjoy a greater degree of leverage than would otherwise be available to them.
Spreads – These are the difference between the rate of your margin and the rate of your deposit. While this is important to many traders, it is one of the primary areas where you will want to pay special attention when you’re comparing different forex brokers. You want to make sure that your spreads are small enough to accommodate your investment, but also large enough to provide you with ample profit margins.
All regulated forex brokers have been thoroughly examined and reviewed by government agencies. To get started in trading forex, you should start with one of the many online brokerages. These have the greatest variety and ease of use. You can also learn more about trading with regulated forex brokers, including common-sense tips and strategies that new traders need to know. To get started in trading forex, find an online broker today.