So you’ve decided to find out what is currency trading and become a retail Forex trader. The second step is to find a broker with an online trading platform which will allow you to test yourself against the market. All brokers have offers and attractive websites to temp you to sign up to them. Knowing what to look out for will stop you from disappointment later!
The devil is in the detail
When trying to find an online trading platform, you will have to sign up to a Forex broker who through their technology will give you the ability to place trades.Placing trades is not a high margin business for FX brokers, they are what attract you in. They earn more by selling you other add-ons or by various administrative fees. Some will even have currency trading tips.It is therefore up to you to read through the documents to ensure that you will get what you expect. There is not substitute for this.
What are the online trading platform Forex spreads?
One of the first areas many aspiring Forex traders look at is the spread on offer. The spread is the difference between the bid (sell) price and the offer (buy) price. The spread is important because the tighter it is, the cheaper your trade is. Controlling your costs is your one area of influence in Forex trading. On major currency trading pairs such as the USD:EUR and EUR:GBP, you will find that most Forex brokers have similar if not the same spread. Where differences will emerge is on currency pairs that are considered minor or exotic currencies. For those of you wishing to trade such risky currencies, it can be appealing to have a good look around. Apart from the price, you will want to ensure that a chosen broker is able to provide you with sufficient liquidity.
Don’t go cheaply
When you first look at various online brokers, they will make all sort of offers to lure you in. Many of these are short-term in nature, namely will expire in a couple of weeks or will only be given once. Then reality hits, and the broker who is providing you with a cheap online trading platform suddenly looks very expensive and not worth it. It is therefore worth being thorough in checking the details of costs over the long run, and whether that online trading platform is truly worth it.
Does the online trading platform care about you?
There is a theory that a business which only has 5 star positive reviews is not a balanced reflection of that service. Reading online reviews can give you a feel what to expect and whether it fits your requirements. Negative reviews are not necessarily bad, though one line rants should be ignored, more in depth constructive criticism should not. As a Forex trader the key things to look out for, are the quality of customer care and any problems with withdrawing money. If there are problems, especially with the later then it is often best to avoid. Cash is king after all.
Follow the top traders
An interesting development that we have seen recently with a few Forex brokers, is for them to list their top performing retail Forex traders. Although we would always caution you from following a particular trader as everyone’s style is different, it can be a great way of learning. Remember when you trade the Forex market you are competing against others. If you understand how the best work, and pick up some of their habits this could only be beneficial. Eventually you will develop your own style which will likely include parts you have cherry-picked from the most successful traders.
Practice makes perfect
Many brokers will allow you too open a demo account before ever having to fund your real life online trading platform account. Sadly some brokers will force you to fund your live account before using the demo account. Best to move on from these. The attraction of a demo account is it allows you to make mistakes which you will learn from. Best of all, these are the cheapest trading mistakes you will likely ever make!
Conclusion
Currency trading is boring. Not something you expected to read, but focusing on the cold hard facts is what will make you a successful Forex trader. Choosing the right online trading platform is the same. Being drawn in by special offers is too easy, reading the detail and thoroughly investigating the offering will ensure no disappointment down the line.
Louis is a portfolio manager and a trader who brings a wealth of experience in private banking to The Lazy Trader. A fundamentalist and a trouble-shooter, Louis makes a firm contribution to the trading team.
Louis is a portfolio manager and a trader who brings a wealth of experience in private banking to The Lazy Trader. A fundamentalist and a trouble-shooter, Louis makes a firm contribution to the trading team.
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When trying to find an online trading platform, you will have to sign up to a Forex broker who through their technology will give you the ability to place trades. Placing trades is not a high margin business for FX brokers, they are what attract you in. They earn more by selling you other add-ons or by various administrative fees. Some will even have currency trading tips. It is therefore up to you to read through the documents to ensure that you will get what you expect. There is not substitute for this. 
One of the first areas many aspiring Forex traders look at is the spread on offer. The spread is the difference between the bid (sell) price and the offer (buy) price. The spread is important because the tighter it is, the cheaper your trade is. Controlling your costs is your one area of influence in Forex trading. On major currency trading pairs such as the USD:EUR and EUR:GBP, you will find that most Forex brokers have similar if not the same spread. Where differences will emerge is on currency pairs that are considered minor or exotic currencies. For those of you wishing to trade such risky currencies, it can be appealing to have a good look around. Apart from the price, you will want to ensure that a chosen broker is able to provide you with sufficient liquidity.
When you first look at various online brokers, they will make all sort of offers to lure you in. Many of these are short-term in nature, namely will expire in a couple of weeks or will only be given once. Then reality hits, and the broker who is providing you with a cheap online trading platform suddenly looks very expensive and not worth it. It is therefore worth being thorough in checking the details of costs over the long run, and whether that online trading platform is truly worth it.
An interesting development that we have seen recently with a few Forex brokers, is for them to list their top performing retail Forex traders. Although we would always caution you from following a particular trader as everyone’s style is different, it can be a great way of learning. Remember when you trade the Forex market you are competing against others. If you understand how the best work, and pick up some of their habits this could only be beneficial. Eventually you will develop your own style which will likely include parts you have cherry-picked from the most successful traders.
