Forex Brokers

& Forex Trading Platforms

Part 2 of ProSignal's

FREE Forex Trading Training Course

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Forex Brokerage Firms

When it comes to getting started in forex trading, there are quite a few things that you have to consider first. The first thing that you need to do is to find and choose the right broker to help you in making your trades.

When you are choosing a Broker you need to know that there are many FOREX brokers to choose from, just as in any other market. Here are some things that you need to look for in making your choice:

Low Spreads

The spread, which is calculated in pips, is the difference between the price at which a currency can be bought and the price at which it can be sold at any specific point in time. FOREX brokers don't charge a commission, so this difference is how they are going to make money.

When you are comparing brokers, you will find that the difference in spreads in FOREX is as large as the difference in commissions in the stock arena. What this means is that lower spreads will save you money and therefore, look for a broker that offers low spreads.

Quality of the Institution

Unlike equity brokers, FOREX brokers are usually attached to large banks or lending institutions because of the large amounts of capital that is required. Also, FOREX brokers should be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Futures Trading Commission (CFTC).

You can find this and other financial information and statistics about a FOREX brokerage on the company’s website or the website of its parent company. You will want to make sure that your broker is backed by a reliable institution.

Extensive Tools and Research

FOREX brokers offer many different trading platforms for their clients just like brokers in other markets do. These different trading platforms often show real-time charts, technical analysis tools, real-time news and data, and even support for the various trading systems.

Before you commit to any one broker in specific, you will need to be sure to request free trials so that you can test their different trading platforms. Brokers usually provide technical as well as fundamental commentaries, economic calendars, and other research as a means of assisting you. Basically, you will want to find a broker who will give you everything that you need to succeed.

A Variety of Leverage Options

Leverage is a key necessity in FOREX trading because the price deviations (the sources of profit) are just set at mere fractions of a cent. Leverage, which is expressed as a ratio between total capitals that is available to actual capital, which is the amount of money a broker will lend you for trading.

For example, when you have a ratio of 100:1, this means that your broker would lend you $100 for every $1 of actual capital. Many brokerage firms will offer you as much as 250:1.

Of course, you need to remember that lower leverage also means lower risk of a margin call, but it also means that you will get a lower bang for your buck (and vice-versa). Basically if you have limited capital, you need to make sure that your broker offers high leverage.

If capital is not a problem, you can rest assured that any broker that has a wide variety of leverage options should suffice. A variety of options lets you vary the amount of risk you are willing to take. For example, less leverage (and therefore less risk) may be preferable if you are dealing with highly volatile (exotic) currency pairs.

 Account Types

Many brokers will offer you two or more types of accounts. The smallest account is known as a micro account and it requires you to trade with a minimum of around $10

There are also, so called mini accounts that require an opening balance around $200 and give you enough leverage to make $1 on every traded 10K lot size. This kind of account is good for someone who just starts to learn how to trade Forex market and can not afford to loose large amounts of money. This offers you a high amount of leverage (which you need in order to make money with so little initial capital).

The standard account allows you to trade at a variety of different leverages, but it also requires a minimum initial capital of $2,000 to get you started. Keep in mind that with standard account you will be trading 100K lots, which means that 1 pip will cost you or bring you $10.

Lastly, there are premium accounts, which often require significant amounts of capital to get you started. It also lets you use different amounts of leverage and often offer additional tools and services. You will need to make sure that the broker you choose has the right leverage, tools, and services that are relevant to the amount of capital that you are able to work with.

Strict Margin Rules

When you are trading with borrowed money, your broker should have a say in how much risk you are able to take. With this in mind, your broker can buy or sell at its discretion, which can be a really bad thing for you.

Let's just say that you have a margin account, and your position takes a headlong nosedive before it begins to rebound to all-time highs. Even if you have enough cash to cover it, some brokers will liquidate your position on a margin call at that low. This action on their part can cost you dearly. You talk to others in person or visit online discussion forums to find out who the honest brokers are.

Signing up for a FOREX account is a great deal like getting an equity account. The only major difference is that, for FOREX accounts, you are obligated to sign a margin agreement.

This agreement basically says that you are trading with borrowed money, and, because of this the brokerage firm has the right to interfere with your trades in order to protect its interests. Once you sign up, all you have to do is fund your account and you'll be ready to trade right away.

Brokers that you need to avoid

Just like there are brokers that you want, there are also brokers that you will want to stay away from. For example brokers who are prone to prematurely buying or selling near preset points (commonly referred to as sniping and hunting) are trifling things that are committed by brokers who only seek to increase profits.

Obviously, no broker would actually admit to doing this, but there are ways to know if a broker has committed this offense.

Unfortunately, the only way that you can really determine which brokers do this and which brokers don't is to talk to fellow traders. There is no actual list or organization that reports this kind of activity. The point here is that you have to talk to others in person or visit online discussion forums to find out who is an honest broker. From our own experience, we would strongly suggest you avoid the Forex Broker known as GFT or GFF or any other company involving Gary Tilken.

Forex Trading Platforms

Your trading is only as good as your ability to enter and manage orders. The trading platform you use serves as the crucial link between you and the marketplace, enhancing or detracting from your ability to identify and capture opportunities. If your trading software is not reliable, fast and easy to use enough then you will get in trouble with your trading within no time.

Different brokerage firms offer different trading platforms when you open an account with them. Before signing up with a broker, make sure that you test the platform they have ready for you. Trading platform is something that you will be using all the time in your trading, you should understand that it is your best friend to be and should choose it in the most careful way. The platform you would choose should fit your trading needs and style; should be able to serve any of your trading endeavors; and of courser, should be easy to learn and understand.

Once you have chosen the broker that you like next thing that you should do is to download the trading platform that this broker offers with its brokerage account. Test the software for at least one month to make sure that it works properly and corresponds to your trading needs. It is very important to see how fast the platform is during market peak times, when there are important economic data releases. Also, make sure that you try placing all order types with this trading platform and see how fast your orders are executed. In addition, look for available news and charting plug-ins, this will save you some money in the beginning of your trading career.

Here are main things that you should look for when choosing trading platform:

1.    Reliability (make sure the platform is reliable, bug free and has no technical problems)

2.    Speed (if you have cable connection, make sure the platform is speedy enough especially during market peak times – U.S. opening, economic data releases, etc.)

3.    User-friendly interface (your platform must be easy to use and you should be able to learn how to use it fast. You do not want to spend 1 month learning how to use a platform. Make sure the platform has your native language interface if you do not feel trading using English language-based platform)

4.    Wide variety of trade execution tools (make sure the platform has ability to execute all trading orders)

5.    Useful Add-ons and Plug-ins (when you just start your trading career you want to save as much money as possible. Make sure your trading platform and your brokerage firm offers news plug-ins, charting add-ons and other tools that will help to improve your trading)

See below on the most commonly used Forex Trading Platforms. 

FOREX TRADING PLATFORMS

FXCM (Forex Capital Markets)

1: Dealing Rates

The dealing rates window reflects streaming real-time prices that update automatically with the slightest market movement. All rates are "dealable" prices where traders can buy or sell the currency pair, not an indication of where the market is trading.

• Real time streaming prices
• 22 of the most active currency pairs
• Choose Fixed Rate Dealing * OR No Dealing Desk Option

In an over-the-counter market like foreign exchange, not all participants have equal access to competitive pricing. The larger and more creditworthy an institution, the better its access to other market participants and the more competitive it's pricing. We believe that the size of the FXCM Group gives us access to competitive prices that are not available to many market makers and can enhance the execution of your trades.

2: Market Orders

Placing a market order is quick and efficient. Simply click on the price where you would like to buy/sell the currency pair. This will bring up a market order box and once you click on "OK" the order will be filled at the exact price you specified* .

• Rapid order execution
• Immediate trade confirmation *
• Real-Time P/L tracking

Trade confirmations are immediate. In the "open positions window" you will find all the information you need * regarding your open trade including the open price and real-time profit/ loss on the position in both pips and dollar terms.

Order execution and trade confirmations are immediate under normal market conditions. All quotes and trades are subject to the terms and conditions of the Client Agreement accessible through this website.

3: Trailing Stops

Stop and limit orders can be placed on open orders by simply clicking on the stop/limit column on the open ticket. These orders can be modified or cancelled at any time. Traders also have the option of setting a trailing stop-loss order that will electronically adjust itself as the market rate moves in the direction of your open position. The trailing stop feature allows traders to lock in profits without having to monitor the market.

• Precise execution of stop/limit orders *
• Trailing Stops feature

All stop-loss, limit and entry orders are guaranteed against slippage except in extraordinarily volatile market conditions. All quotes and trades are subject to the terms and conditions of the Client Agreement accessible through this website.

4: Margin Watcher

All account information is updated on a tick-by-tick basis giving traders a complete view of their account activity. FXCM offers .5% margin requirement on both standard and mini accounts. Traders have the ability to select the degree of leverage they wish to use. Margin requirements are fixed for both intra-day trading and for positions held overnight.

• Real-time margin tracker
• Multiple leverage options*
• No debit balance ever!

Based on each trader's margin requirement, the FX Trading Station will calculate in real time both the funds needed to maintain current positions (Used Margin) and the funds available for available for taking new positions (Usable margin). If the equity in the account drops below the margin required to maintain the open positions, a margin call will occur and some or all open positions will be closed by the dealing desk at the market price. This provides protection against accounts falling below the account equity, particularly in volatile, or fast moving markets.

* This high degree of leverage without proper risk management can lead to large losses as well as gains.

5: 24 Hour Reporting

Clients can generate detailed account statements on demand from the FX Trading Station. The reports can contain up-to-second account information or be customized to reflect activity between any two given dates. These reports are comprehensive, including the details for each specific trade. In order to receive a hard copy record, the client simply clicks on the print function.

• 24-hour access
• Detailed information on every trade
• Select time parameters
• HTML and printer friendly

6: Fixed Rate Options

If you have an account with FXCM, you automatically have the ability to trade Fixed Rate Options system using your existing login name and password. No additional paperwork is necessary. Fixed Rate Options simplify trading for those who lack the time to actively follow the currency market. FXCM offers one-touch, no-touch, double one-touch, double no-touch and digital options. Options on the Fixed Rate Options system may be bought for time periods as short as 12 hours and as far out as 1 month.

• No Special Account Needed
• Fixed Payouts
• Trade from range bound or trending markets

7: Live Streaming News

News is available as an integrated feature on the FX Trading Station. IFR Forex Watch, Thomson Financial's premier institutional FX news and analysis service, provides the real time content for FXCM News. With one click of the mouse, clients can access FXCM News, no additional login is necessary. The FX News window is adjustable, allowing simultaneous viewing of both live prices and real time news. There is no cost to FXCM clients for this service.

• 24 hour news, technical levels, and market analysis
• Powered by Thomson Financial
• Direct access from FX trading station

8: MyFXCM.com

My FXCM is an interactive website exclusively for FXCM clients. The site enables clients to quickly and easily perform administrative functions, access account information and reports. My FXCM requires no special software and can be accessed on any computer via your Internet browser 24- hours a day. As always the FXCM operations staff is available 24-hours a day, 7 days a week to answer any questions or concerns that come up while you trade.

• Easy Online Access
• Modify account margin
• Add an additional account to the trading platform
• View account numbers and balances

Oanda FX Trade Platform (Browser Based Platform)

There are many other trading platforms; we have shown you our 2 favorite forex brokerage firms and forex trading platforms. Make sure you choose the forex platform that best serves your needs. However, if prefer fully automated trading (with the ability to intervene in the trades when you desire), you should consider ProSignal's AutoTrader Platform with over 300 automated forex trading strategies to choose from.

Topics Related to Forex Trading Brokers:

Home: Fully Automated Forex Trading Systems with Automated Trade Execution on 300+ Forex Trading Strategies

Home 2: Auto-Trading Performance

Part 1: Introduction to Forex Trading

Part 2: Forex Brokerage Firms & Forex Trading Platforms

Part 3: Forex Charts

Part 4: Forex Fundamental Analysis & Economic News Releases

Part 5: Technical Analysis

Part 6: Technical Indicators

Part 7: Fibonacci Analysis

Part 8: Elliot Wave Theory

Part 9: Candlestick Chart Analysis

Part 10: Money Management

Part 11: Trading Psychology

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