The forex market is bigger than the equity, bond, and commodity markets. Forex investors come from a wide variety of backgrounds, though big institutions like banks, multinationals, and hedge funds generate most of the trade.
Venturing into Forex Trading
All forex trading should start with research. A good forex trading platform will have all the resources you need to set you on the path to a successful forex trading career. The educational resources are free to use, starting with the basics of forex trading, all the way through advanced training.
The knowledge you gain through your research should form the basis of a trading strategy. Test the plan, starting small, and adjust it until the plan produces positive results. Still, before you start, you’ll need a good forex broker.
Why You Need a Forex Broker
The forex market is the world’s largest financial market. There is no single exchange. The market is decentralized, made up of a global network of organizations, trading amongst themselves. Individual traders need forex brokers to facilitate trade.
Brokers also offer other services such as leveraging. Leveraging allows traders to buy and sell for more than they have in their accounts. This increases the amount of profit a trader can make, but it also adds to the risk of heavy losses.
How to Choose the Best Forex Broker
Choosing a forex broker is important, especially for new traders. Before you settle on the forex trader you plan to use there are several factors to consider
- Access to various markets
- Costs
- Trading platforms
- Security
- Educational Resources
- Customer support
Access to Markets
Even if, at this stage, you’re interested only in forex trading, it’s good to have options. Most forex brokers offer access to other financial assets like cryptocurrencies, stocks, CFD and commodities. Choose a broker with a wider asset range and you could venture into other markets in the future.
Costs
Excessive costs will have a detrimental effect on your profitability, so before you commit to a broker, understand the costs and evaluate them against market equivalents. Most forex brokers make their money on spreads, the difference between the currency buy and sell price. The lower the spread, the less the trader pays.
Some brokers have more than one account type, offering a combination of spread and commission. For traders who move large volumes, this may be the better choice, since the spread is smaller.
Forex Trading Platforms
Make sure to choose the best trading platform. The platform must have a clear interface and easy-to-use software. Some platforms excel in the provision of online education, ensuring that all traders have access to learning materials, up-to-date news, and market analysis tools and charts.
MetaTrader4 is the most used generic platform. Many forex brokers also offer their own in-house trading platform. For beginners, a demo account is a big plus, as it gives you the option of learning the tricks of the trade without putting your funds at risk. Copy trading is another useful feature that is growing in popularity. With copy trading, you copy the trading strategy of a professional trader.
Also, evaluate the platform's risk mitigation tools. The platform should support orders such as stop loss and take profit orders to reduce the risk of big losses and optimize profits.
Security
Make sure your broker is licensed and regulated. There are several regulatory bodies, policing global forex markets. Licensed forex brokers must submit to regular audits to ensure that their practices are above board.
Customer Service
Make sure that there is a customer service desk, so you can get advice when things go wrong. Check customer reviews to see how the brokerage has performed in the past.
Find the All the Tools You Need to Trade Forex
A well-designed forex trading platform will provide you with the resources to understand forex trading. You’ll also find all the tools you need to trade forex.