Forex brokers in effect connect the forex traders to the crazy world of the forex markets. This makes the forex brokers an important aspect of any forex trader’s general perception of trading the forex markets. But every now and then, the question arises in regards to the authenticity or the credibility of the forex brokers. Sure the competition is so much in the forex industry that any sane forex broker wouldn’t dare to indulge in any unethical practices.
There is a well known fact that you dive into something only when you’re well aware of the consequences and this could not be more apt when put into perspective of forex trading. A forex broker is nothing less than a long term partner in a forex trader’s journey, thus it is but obvious for one to perform a thorough research on the forex broker before you start trading with them.
But Wait, There’s More About Forex Justice Reviews
Most people and even traders believe that trading with a licensed forex broker is the best way to go, while this may be true the fact remains that with being regulated or licensed a forex broker has to comply with certain business practices and this can get in the way eventually. After all, a forex trader, well worth their salt would prefer to use their time trading rather than having to fill out vast paperwork. But there’s a tradeoff that must be made. Just to avoid the paperwork one could sign up with an un regulated forex broker. This carries its own set of risks. There are scores of scams these days and if one follows the news carefully you would not miss the fact that every day more and more lesser known, small financial brokers are brought to justice. The point being made here is that traders need to utilize their common sense and judgement before deciding on the forex broker they wish to join. Instead of falling prey to high leverage or reduced spreads or commissions, finding a balance and walking the thin line might be the best approach.
Which brings us to the other part about leverage. As the word is self explanatory, leverage in forex terms gives your initial investments a push. Leverage is indeed important because without leverage the profits one could obtain would be minimal. Let’s put it this way, forex leverage helps traders in order to attain the maximum profits from a trade. Forex brokers offer leverages that range between 1:50 to as high as 1:500, although a recent CFTC ruling states that leverage that is offered to retail forex traders be not more than 1:50. So what exactly does this 1:50 leverage mean? For every dollar invested by a trader, the forex broker would top that dollar with $50, thus giving the trader a higher chance of investing the amounts to make better profits. But ofcourse the losses would just be the same. In other words, if you trade with a 1:50 leverage, then your profits and losses would be 50 times more. This type of trading is also refered to as margin trading.
Forex spreads or commissions is what keeps the brokerages running. In return for connecting you to trade on the forex markets, the brokerages mark up a certain level which in the shape of commissions or spreads. In forex, there are two types of spreads; fixed and volatile. Fixed spreads offer the trade the stability and thus provide a consistent spread that a trader would pay, regardless of the market conditions, while on the contrary a variable spread keeps fluctuating based on the market movements. A spread is zero but the gap between the bid and the ask price and when you trade the currencies, you trade in pairs and that’s where the brokerages make their profits. Perhaps the most important aspect to consider for a trader to understand if they would trade round the clock or trade only during opportunistic moments, the response to this would result in either choosing a fixed or a variable spread.
Due research must be carried into place here as the spreads vary from one broker to another. So always compare forex brokers and then press the one that best suits your needs based on your forex reviews.
The next factor to consider is the forex trading platform itself. In today’s age, we’re well versed with the MetaTrader platform, Currenex. This is used mostly for direct executions of the trades, the Streamster platform and many more. Choose a forex trading platform that is more ideal to your trading style. There are adequate resources as well as communities available to assist you both get started as well as answer your questions when you consider you’re stuck. Needless to say MetaTrader is the most popular platform as it enjoys a vast ecosystem in the form of forex robots, expert advisors, trade signals, and so on.
Forex trading can be fun and yes anyone can start trading the financial markets. All it takes is a few good days or maybe weeks to get acclimatized with the technical jargon and then slowly turn to the more complex strategies and trade ideas. Most forex brokers offer mini accounts which can be funded with just $100 or less. This makes it ideal if you want to get a taste of forex trading. True there are demo accounts available. However, its vastly different in comparison to real time forex trading.