Are you looking to enter the world of Forex trading? If so, spend some time doing some preliminary research. Currency trading is the largest and most liquid market in the world. It is estimated the US trading is roughly $2 trillion per day. The market is open 24 hours a day 5 ½ days a week. Large institutions such as banks dominate the trading. They usually have traders stationed in the different time zones in London and Tokyo. This places the individual trader at a disadvantage. Stop loss orders must be placed when the trader is not able to follow the market.
The Forex market is highly leveraged. That means that you can open an account with small deposit. For example if the leverage is 100 to 1 and you open an account with $1,000, you are controlling $100,000 of trades. You are able to make huge profits or be wiped out in a matter of minutes.
Forex is done in pairs with four major pairs using the US dollar as the base. The difference between the two currencies is the spread, usually quoted in pips. You trade this spread and can either buy or sell. If you are long you are looking for the spread to increase. If short, you want it to decrease.
These two factors are important in choosing a Forex broker. Companies offer wide choices in account minimums, leverage and pip spreads. These are usually quoted in company disclosures. Learn more about Forex broker: Get Started
Another important criterion is the location of the brokerage firm and who supervises the firm. In the United States, Forex trading is regulated by the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC.) For this reason, many foreign-based firms are not accepting US customers. In this discussion only US based firms are being considered. In addition, only US firms that already state that they are under this supervision were considered. There is an important reason for this. The regulating agencies recently indicted about a dozen Forex firms for improper practices. A firm that is upfront with this disclosure is more likely to avoid regulatory missteps.
Another important consideration is the trading platform. The highest rated firms offer several of the best platforms. The platform is key in getting fast, accurate executions.
These factors narrow the choices. Barrons rated MB Trading 4 ½ stars. It was formed in 1999. Their offerings include spreads of 1-2 pips, MBT Navigator platforms, leverage of 100.1 and states regulation by the NFA and the CFTC.
Fast Brokers was established in 2004. Spread is 1 pip. Leverage is 200.1 and states regulation by the NFA and CFTC.
There hundreds more Forex brokers available. Also keep in mind that large banks offer forex trading, however, it is usually for larger, professional traders. Get More knowledge: http://currency-trading-basics.com/forex-option-trading-basics/