Forex trading services are offered through online platforms, from
companies commonly known as Forex brokers. With offices throughout the
globe, brokers make Forex accessible to anyone with an internet
connection but recent cases have raised the issues of scam and abuse.
For every trader that wants to stay safe, a considerable amount of
research must be done in order to make sure that their potential broker
is regulated, provides segregation of client funds and efficient
support. In this article we are going to continue emphasizing on some
important elements that every investor should be aware before opening a
Forex trading account.
Account Types: There are two main account types offered by brokers today, STP and dealing desk. STP or straight through processing will give you the ability to trade directly with the liquidity providers where dealing desk accounts will allow the broker to intervene in your trading activity and alter the market. Most brokers today are considered dealing desk but in many cases you can find firms that offer both account types. Keep in mind that each of the main account types can be sub-divided into more options based on your budget, such as micro account (or micro-STP) for small investments, standard accounts (or STP) for medium investments and VIP for large investments and corporate accounts.
Leverage: Proper risk management in Forex trading cannot be obtained without proper understanding of leverage. This feature gives the ability to investors to trade large volumes with minimum investment, having a better change of maximizing profits. Using high leverage is not recommended for newcomers as apart from increasing profits it can also increase losses, leading into an empty account balance if not properly monitored. Brokers offer flexible leverages ranging from 1:1 up to 1:1000 depending on your investment and account type. Make sure that you check the leverage options offered by your broker and select the one that meets your budget requirements, trading style and money management.
Promotions: Most reputable Forex brokers today offer a variety of promotions to new investors in an effort to increase their clientele and overcome their competitors. Promotions usually come in the form of welcome bonuses, meaning that your trading balance will increase by a specific percentage based on your initial investment. You can find welcome bonuses available throughout the year and can range from 10% up to 100% depending on the broker, account type and investment. Keep in mind that in most cases you cannot withdraw your welcome bonus.
Account Types: There are two main account types offered by brokers today, STP and dealing desk. STP or straight through processing will give you the ability to trade directly with the liquidity providers where dealing desk accounts will allow the broker to intervene in your trading activity and alter the market. Most brokers today are considered dealing desk but in many cases you can find firms that offer both account types. Keep in mind that each of the main account types can be sub-divided into more options based on your budget, such as micro account (or micro-STP) for small investments, standard accounts (or STP) for medium investments and VIP for large investments and corporate accounts.
Leverage: Proper risk management in Forex trading cannot be obtained without proper understanding of leverage. This feature gives the ability to investors to trade large volumes with minimum investment, having a better change of maximizing profits. Using high leverage is not recommended for newcomers as apart from increasing profits it can also increase losses, leading into an empty account balance if not properly monitored. Brokers offer flexible leverages ranging from 1:1 up to 1:1000 depending on your investment and account type. Make sure that you check the leverage options offered by your broker and select the one that meets your budget requirements, trading style and money management.
Promotions: Most reputable Forex brokers today offer a variety of promotions to new investors in an effort to increase their clientele and overcome their competitors. Promotions usually come in the form of welcome bonuses, meaning that your trading balance will increase by a specific percentage based on your initial investment. You can find welcome bonuses available throughout the year and can range from 10% up to 100% depending on the broker, account type and investment. Keep in mind that in most cases you cannot withdraw your welcome bonus.