This article looks at leverage, investment capital and applications offered by forex brokers.
Forex brokers are the link between you and a successful trade. The type of account that you are offered, the spread, leverage and service can all make a huge difference to your bottom line.
The broker and the country where your broker is located play a huge role in the leverage ratios you will be offered. You should view leverage as a loan from your broker, based on your margin account. If you were offered leverage of 50:1 and you held a balance in your trading account of $2,500, you would be able to enter a position to the value of $125,000. Leverage is favourable if your trades are successful as it increases your profit margin considerably. However, if your trade turns into a loss, you could deplete your account quite rapidly. This makes it important that you use leverage with caution and be well aware of the potential consequences of using it.
Standard accounts are most appropriate for traders with experience in the market. The trades are done in standard lots which equal 100,000 units of currency. In this type of account, a single pip is worth $10. Many brokers require minimum deposits of about $10,000, but there are those that ask for deposits as low as $1,000.
If you were to open a micro account, you have the facility to trade in smaller sizes than a standard lot. A micro lot is the equivalent of 1,000 units of currency. However, a single pip in a micro lot is only worth $0.10. This type of account is ideal for traders who wish to trade with a smaller initial investment. It is also suitable if you wish to trade live, but do not want to risk too much of your money. It is possible for you to open a micro with as little as $5. Micro accounts generally do not come standard with chat or telephone support. You have to contact support via email, through the frequently asked questions or through an online community.
There is the option of a mini account which comes with lots equivalent to 10,000 currency units. A single pip in a mini account is worth $1.
Forex Brokers Mobile Applications
Forex traders who are constantly on the move would appreciate mobile trading. You can keep on top of the market at all times and check your trades whilst you are moving about. Some of the larger brokerages offer mobile applications for Android, iPhone and iPad. These apps allow you access to the trading platform, as well as to charts and relevant forex news. The applications are normally included in your funded trading account and are free of charge.
The services offered by forex brokers vary greatly and you have to be sure to find one that offers exactly what you need to trade effectively. You need to confirm factors such as spreads, account types, currency pairs and the minimum amount required to open a trading account. Once you have made a final decision regarding a forex broker, you should make sure to read the entire contract, including the fine print, before you sign up.
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