The Forex market and equity markets have many similarities. Nevertheless, there are still differences regarding these two. The main difference on the list is the broker.
In Forex trading there are a lot of brokers to choose from. To know how to look for the right broker, what to look for is as follows:
> Low Spreads - this calculates the pips. This is the big difference between the prices that a currency can be bought at, and the price that it can also be sold at, in a given point in time.
Usually, brokers don't charge commissions. The question is: How they can make money out of Forex trading?
> Quality Institution - Forex brokers are normally tied to huge banks or lending firms, since a large amount of money is required. Also, a true Forex broker must be registered with the FCM (Futures Commission Merchants) and regulated by the CFTC (Commodity Futures Trading Commission).
> Extensive Tools and Research - brokers provide their clients with many different platforms for trading. These platforms can provide real-time charts tools, support for trading systems, and real-time data/news. Before hiring a Forex broker, make a request for free trials to know the difference in trading platforms.
> Wide Range of Leverage Options - This is essential in Forex, since the price diversions are just fractions of a cent. The leverage usually is expressed as ratio between total capitals that are available to actual investment. This is the amount that the broker will lend their clients.
> Account Types - most brokers provide two-or-more kinds of accounts. The smallest of these is called the mini account that requires their clients to trade with a minimum of $250. The standard account lets traders trade with many different leverages; this requires from them about $2,000 in capital.
Here are the things that traders must watch for, and avoid.
> Sniping or Hunting - also known as prematurely selling or buying near preset points; these are shady acts committed by brokers to gain profits. There is no organization that reports such activities.
> Strict Margin Rules - your borrowed money will be at risk - this is what your broker will tell you. Your broker will simply liquidate your position in a trading position, or on a margin call.
The Forex market is the biggest market around the globe, and everyday individuals are increasingly interested in joining the market. But before anyone can begin trading, traders should meet with their brokers first for specific criteria. Traders should take time to look for the best strategy that works for them. The best way to learn how to trade is by signing up for a demo account and try it out to get a good feel for it
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