Costs of Using Online Forex Brokers, Which Forex Brokers Should We Use & 5 Reasons Why You Should Start Forex Trading
The Costs of Using Online Forex Brokers
By Dragan Lukich
Which Forex Brokers Should We Use?
By Dragan Lukich
Since the advancement in online Forex trading, there are literally hundreds of Forex brokers available to choose from. Some say that the increase in numbers creates a healthy and competitive market but the ease of 'getting into the broking industry' has also attracted a few non-compliant business ventures. So, whilst a Forex broker's online presence (website and advertising) is shiny, their work ethic could operate against the customer.
In simple terms, there are three types of Forex brokers:
1. Market maker - these types of Forex brokers can trade against you. For example, if you are consistently profitable, you are costing your broker money. If you cost them too much, they will take a larger position against you the next time you trade thus forcing the price to move against you on their trading platform - this is how they 'make the market'. They can only do this on their trading platform rather than the global market. They can also change prices and spreads as they please. However, not all market makers are bad so it does pay to conduct research to make sure your account does not suffer just because you are successful.
2. ECN brokers - this is a friendly broker that has your interest at heart. They will charge you exactly the same spread and commission that they get charged by the big financial institutions that provide their prices. Your trading is safe and secure.
3. STP broker - these types of Forex brokers are a mixture of the two above. They tend to work with complicated algorithms that make the market for unsuccessful traders and let the good traders continue.
Whilst traders are in their Forex training stage, the task of choosing the right broker is probably at the back of their mind. However, this should not be the case. The purpose of Forex training is that traders get familiar with real market conditions. That includes price movement and the ability to operate their Forex broker's platform. Once Forex training is over and the market conditions become 'real' the last thing any trader should do is start using a brand new platform. This will severely decrease their screen time and more learning time will need to be given to the new platform.
The remedy is simple. At the very start of the Forex training process traders must find a suitable Forex broker that will act in their interest in the demo and the real market environment. ECN or STP brokers should be the first choice and if other market makers are suitable then by all means, they should be added to the mix. This will ensure that no further broker research is required at the later stage when more time should be spent on trading.
5 Compelling Reasons You Should Start Forex Trading
By Smit Cribat
By Dragan Lukich
Choosing an online Forex broker can be a daunting task and costs involved for the privilege can be unrealised until a live account is open. It is therefore the purpose of this article to list all possible costs involved of having a Forex broker, which traders should be aware of before making their choice.
Spreads
The first cost is the spread. This is basically the difference between the bid and ask - the buying and selling price of a currency. Spread width will vary from broker to broker but the point is that the spread is the debt every traders starts with when they open an order. For instance, if the spread is 2 pips, a trader will need to accumulate 2 pips worth of profit in order to break even. It is after this point that a profit can be made. So, if you are trading $10 per pip, a gain of $20 will need to be made before profit can be achieved.
Some Forex brokers do operate with a fixed spread but more than often, variable spreads are used. This means that the spread width will change according to market volatility. The more volatile the market, the wider the spread. When the market is at mid-range volatility spreads tend to be around 2 pips or so, depending on the broker. Please remember that if the market is extremely quiet with hardly any volatility, spreads are also very wide.
Commission
This is the main way Forex brokers make money. It is simply a charge that is added to an order every time one is made, whether it is a buy or a sell. So, payment has to be made when you enter the market and when you exit the market. Some Forex brokers lower their spreads to make themselves look more attractive but they also add a commission charge to orders in order to regain their spread loss. As part of a trader's Forex training, finding out commission costs from various brokers should be a key task in their development.
Credit and debit of trading account
Whilst the idea of adding and removing money to and from your trading account should not be a chargeable action, there are a lot of brokers that utilise this to their advantage. It is not uncommon for overseas or new brokers to do this but they argue the case because of their provision of low spreads.
The key is to make 'broker cost search' an element of your Forex training programme. Demo accounts should be provided where every cost can be realized before a live account sign-up. On the other hand, if you trade big volumes through your broker then negotiating a cost decrease should not be avoided.
Spreads
The first cost is the spread. This is basically the difference between the bid and ask - the buying and selling price of a currency. Spread width will vary from broker to broker but the point is that the spread is the debt every traders starts with when they open an order. For instance, if the spread is 2 pips, a trader will need to accumulate 2 pips worth of profit in order to break even. It is after this point that a profit can be made. So, if you are trading $10 per pip, a gain of $20 will need to be made before profit can be achieved.
Some Forex brokers do operate with a fixed spread but more than often, variable spreads are used. This means that the spread width will change according to market volatility. The more volatile the market, the wider the spread. When the market is at mid-range volatility spreads tend to be around 2 pips or so, depending on the broker. Please remember that if the market is extremely quiet with hardly any volatility, spreads are also very wide.
Commission
This is the main way Forex brokers make money. It is simply a charge that is added to an order every time one is made, whether it is a buy or a sell. So, payment has to be made when you enter the market and when you exit the market. Some Forex brokers lower their spreads to make themselves look more attractive but they also add a commission charge to orders in order to regain their spread loss. As part of a trader's Forex training, finding out commission costs from various brokers should be a key task in their development.
Credit and debit of trading account
Whilst the idea of adding and removing money to and from your trading account should not be a chargeable action, there are a lot of brokers that utilise this to their advantage. It is not uncommon for overseas or new brokers to do this but they argue the case because of their provision of low spreads.
The key is to make 'broker cost search' an element of your Forex training programme. Demo accounts should be provided where every cost can be realized before a live account sign-up. On the other hand, if you trade big volumes through your broker then negotiating a cost decrease should not be avoided.
We provide a full Forex training course for new and up-coming traders. Our website includes a comprehensive Forex brokers list where you can find the right broker for you.
Article Source: http://EzineArticles.com/?expert=Dragan_LukichWhich Forex Brokers Should We Use?
By Dragan Lukich
Since the advancement in online Forex trading, there are literally hundreds of Forex brokers available to choose from. Some say that the increase in numbers creates a healthy and competitive market but the ease of 'getting into the broking industry' has also attracted a few non-compliant business ventures. So, whilst a Forex broker's online presence (website and advertising) is shiny, their work ethic could operate against the customer.
In simple terms, there are three types of Forex brokers:
1. Market maker - these types of Forex brokers can trade against you. For example, if you are consistently profitable, you are costing your broker money. If you cost them too much, they will take a larger position against you the next time you trade thus forcing the price to move against you on their trading platform - this is how they 'make the market'. They can only do this on their trading platform rather than the global market. They can also change prices and spreads as they please. However, not all market makers are bad so it does pay to conduct research to make sure your account does not suffer just because you are successful.
2. ECN brokers - this is a friendly broker that has your interest at heart. They will charge you exactly the same spread and commission that they get charged by the big financial institutions that provide their prices. Your trading is safe and secure.
3. STP broker - these types of Forex brokers are a mixture of the two above. They tend to work with complicated algorithms that make the market for unsuccessful traders and let the good traders continue.
Whilst traders are in their Forex training stage, the task of choosing the right broker is probably at the back of their mind. However, this should not be the case. The purpose of Forex training is that traders get familiar with real market conditions. That includes price movement and the ability to operate their Forex broker's platform. Once Forex training is over and the market conditions become 'real' the last thing any trader should do is start using a brand new platform. This will severely decrease their screen time and more learning time will need to be given to the new platform.
The remedy is simple. At the very start of the Forex training process traders must find a suitable Forex broker that will act in their interest in the demo and the real market environment. ECN or STP brokers should be the first choice and if other market makers are suitable then by all means, they should be added to the mix. This will ensure that no further broker research is required at the later stage when more time should be spent on trading.
Visit our website for a list of trusted Forex brokers. We also provide Forex training in a form of video tutorials to ensure you learn to trade the Forex market at your own pace in your own time.
Article Source: http://EzineArticles.com/?expert=Dragan_Lukich5 Compelling Reasons You Should Start Forex Trading
By Smit Cribat
The currency trading market is always a hive of activity and being a $4 trillion a day market, it's understandable why. If you haven't yet started trading in currency, now is the time to start. With the availability of many online trading services, there isn't any reason why you shouldn't get involved. But in case you are not convinced yet, here are five compelling reasons why you should reconsider your stand.
Advantages of FX trading
Great liquidity - The size of the forex market is unmatched by any other trading asset. This means you can move large amounts of money easily, and at any time, given that this particular market never sleeps.
Accessibility - Unlike stock trading where you need a ton of money to start, forex is a more accessible area. While you do need a minimum balance to start trading, typically $100, it is generally affordable. You can trade on margin, where you basically trade more money than you initially deposit. This leverage is a constant in all trading sites. Though it carries risk with it, it basically gives you more trading power, and creates an opportunity of making good profits.
Low transaction cost - For forex, the cost of doing business is at an all time low. This cost, or spread, is low enough to be inconsequential.
Transparency - With forex, what you see is what you get. The immensity of the market means no single entity can control the market prices. The absence of middlemen means you deal directly with the market. This not only evens out the odds of all traders, it reduces execution time to fractions of seconds. The net effect of this is going long or going short whenever the conditions seem suitable. This transparency of this forex is one of the niceties that allure beginners, and for good reason.
Profitability - Perhaps the biggest advantage of forex trading is the probable ease of making profits. Unlike the stock market, where your profit hinges solely on the improving price of your stocks, forex increases your odds of profiting. Because you always work with two currencies, chances are when one currency dips, another improves, so you mostly end up on the winning.
Above are some of the advantages related with the forex trading market. And besides the above mentioned factors there is another aspect, known as demo accounts is related to forex, and that can be immensely beneficial for the beginners. The availability of demo accounts on many online trading platforms enable risk free trading.
Advantages of FX trading
Great liquidity - The size of the forex market is unmatched by any other trading asset. This means you can move large amounts of money easily, and at any time, given that this particular market never sleeps.
Accessibility - Unlike stock trading where you need a ton of money to start, forex is a more accessible area. While you do need a minimum balance to start trading, typically $100, it is generally affordable. You can trade on margin, where you basically trade more money than you initially deposit. This leverage is a constant in all trading sites. Though it carries risk with it, it basically gives you more trading power, and creates an opportunity of making good profits.
Low transaction cost - For forex, the cost of doing business is at an all time low. This cost, or spread, is low enough to be inconsequential.
Transparency - With forex, what you see is what you get. The immensity of the market means no single entity can control the market prices. The absence of middlemen means you deal directly with the market. This not only evens out the odds of all traders, it reduces execution time to fractions of seconds. The net effect of this is going long or going short whenever the conditions seem suitable. This transparency of this forex is one of the niceties that allure beginners, and for good reason.
Profitability - Perhaps the biggest advantage of forex trading is the probable ease of making profits. Unlike the stock market, where your profit hinges solely on the improving price of your stocks, forex increases your odds of profiting. Because you always work with two currencies, chances are when one currency dips, another improves, so you mostly end up on the winning.
Above are some of the advantages related with the forex trading market. And besides the above mentioned factors there is another aspect, known as demo accounts is related to forex, and that can be immensely beneficial for the beginners. The availability of demo accounts on many online trading platforms enable risk free trading.
If you are still not sure about trading in stock market/CFD/Forex, let me help you by giving you £20/€25/$25 welcome bonus so you can start trading without depositing a single penny! Visit my plus500 trading platform and claim your £20/€25/$25 welcome bonus. Good luck and good trading! Visit plus500 trading platform.
Article Source: http://EzineArticles.com/?expert=Smit_Cribat
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