In order to trade, the Forex Trader must use a broker. The broker facilitates the Forex Traders orders. Quick execution and minimal slippage as well as small spreads factor in the determination of which broker is best.
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When you enter a trade at the current market price, it is called a MARKET ORDER.
When you place a buy order above the market it is called a STOP ORDER. I think of this as, “I want to stop the train and get on for the ride”.
When you place a sell order below the market it is also called a STOP ORDER. I think of this as, “I want to stop the train and get on for the ride”.
When you place a sell order above the market it is called a LIMIT ORDER. I think of this as, “I believe the market has reached it’s limit and is about to turn around. I want to take the ride in the new direction”.
When you place a buy order below the market it is also called a LIMIT ORDER. I think of this as, “I believe the market has reached it’s limit and is about to turn around. I want to take the ride in the new direction”.
The amount of capitalization is the amount of money the broker has to trade with. The larger the amount, the more people there are who trust the broker with their money.
It would be best to hold your account in the currency you use. You do not want to have to exchange the currency when you deposit and withdraw money. Many brokers in other countries will allow you to hold your account in US Dollars. Check and find out.
The NFA has recently changed their policies, so many Americans have moved their forex accounts out of their country. Hedging is not allowed in the United States.
There is a small amount of time between the time that you enter the trade into the platform and when the trade is actually executed. During this time, the price can rise or fall. The amount of pips the market moves while you are trying to make the trade is called the slippage.
When we trade on the forex, we always leverage our trade. Most of us don’t have the large amounts of money that is required to trade, so we trade on margin (borrowed money).
Gold and silver spot tradable instruments are offered by some brokers as an ideal solution for both long- and short-term speculation. Some brokers also offer stock trading, too.
Swap or Rollover is the interest added or deducted for holding a position open overnight.
Everytime you enter a trade, the broker gets his piece of the action. This is called the spread. Each currency has a different spread. The higher the spread, the more the broker gets. The idea is we want a broker that will takes small spreads. Continue reading