Getting started in FOREX requires a great deal of reading and learning in order to gain the best understanding of both the market and the trading techniques available. In order to help you get started in this industry the first thing which you will need is a broker, and here is what you should be looking out for.
– Low Spreads
The spread is the difference between the price which a currency can be bought at versus the price which it can be sold at. Brokers won’t make money from commission in FOREX trading, so the spread is how they can make the money for their services, when you compare brokers you’ll see a large difference between spreads, simply put, lower spreads saves you money.
– Quality of the Institution
More often than not you will find that unlike equity brokers, those who operate within FOREX will be connected with large banks and financial insinuations owing to the large volumes of capital which they need to provide. Along with ensuring that your broker of choice is a respected and well backed, you must also ensure that they are registered with the Futures Commission Merchant (FMT) and that they are properly regulated by the Commodity Futures Trading Commission (CFTC).
– Trading Platforms and Tools
With such competition between brokers, clients can now benefit from the array of different trading platforms and a wide variety of tools which you can use for analysis, calculations and viewing real-time data. First you should understand the various forms of trading available such as what is the CFD trading platform like, how quickly will the platform execute and what other forms of trading are offered. In terms of extras, look for a broker that will provide you with a wide range of helpful tools so that you can easily analyze and view data within the platform.
– Leverage Options
Leveraging is a necessary method in FOREX because of the minor difference in price that you are dealing with, leveraging here refers to the ration between actual capital and total capital available. For example you may have a margin requirement of $1,000 with the possibility of opening up a position of 100:1 of your margin. This varies from firm to firm because in essence the broker lends money to the trader in order to open the position. You will find that the brokers that are well backed will be the ones that can offer you a wider leveraging option. If you are operating with limited capital, a high leverage is what you should be looking out for.
– Account Options
Most brokers will offer 2 or 3 account types for you, depending on what kind of capital you are playing with. The smallest of these accounts will usually let you trade with a $250 required margin, and with high leveraging options. Standard accounts will vary between brokerage firms, offering a arrange of requirements and leveraging options. Finally you have premium accounts which required large amounts of capital, offering the full service in terms of leveraging and additional service which you can make the most of. Understand what your capital is and then find an account that suits you.
Once you have the right broker, there will be nothing stopping you from getting started with your trades.