Reduce Forex Spreads With Low Spread Trading Brokers
Tips to Reduce Forex Spreads With Low Spread Trading Brokers
To earn at forex, you must acquire top-notch ability to read the market. This is not difficult particularly with the numerous tools available. You should not, however, be dependent on these tools, sophisticated as they are they are not infallible. They give you adequate assistance in developing analytical skills, and that's about it.
Besides the required analytical skills, you must know when is the best time to trade, what currency and under what conditions to trade. Now, the best condition to trade is when your broker is offering you low spread on your trades. Coupled with an identified trend and you stand to make a killing. What's a low spread? It just means your broker is taking less money for his services. In concrete terms, he is just adding a few pips to the price of the currency pair you are buying. This means that a reasonable increase in the selling price of the currency pair you are trading brings you decent profits.
Different brokers offer different spreads. Some will offer low spread on selected currencies while others will go high spread on the same currency pairs. It is very important that you devise something which can help you identify which brokers are offering low spread trading at all times. A good place to go is forex brokers review websites which assess the services offered by different brokers. Saves you time visiting brokers websites one after another.
You may notice that online brokers provide different trading platforms using which you can sell and purchase in Forex market. You must select a trading platform which charges fixed and low spread values.
When you carry out Forex trading and use Forex brokers, you will notice that the brokers do not charge any commission for services provided by them, unlike stock brokers. But they don't provide free services but earn their profits by charging a "spread' from investors, and it is good to choose a low and fixed spread trading platform so that you don't too much of your profits to brokers.
The spread is the difference between ask price and bid price for the traded currency pair. The broker will add this spread value to trade price and will consider it as the trading fee, and it is like the hidden commission. One advantage of the spread is that you will pay it only while purchasing and not while selling the currency. A currency trading of 8 pips vs. 10 pips will cost 25 percent difference in your trading expenses, and this makes it clear why you must select a trading platform with low spread.
GBP/ USD and USD/EUR have lowest spreads. Some Forex brokers charge different spread for various account types. A trading platform with low spread might not provide good mini-trading and will have high spread value than live trading account. But if the spread value is smaller on currency pair then the conditions for trading is very good for you as an investor.
A good low spread forex broker currency platform will show you live prices which you can trade at and not just quotes. The low spread platform must show the actual trading prices for you get a clear picture of spread. While choosing a trading platform, you must think about below features,
1. Lower Spread: The trading platform must charge lower spread value for all currency pairs, and it must be fixed.
2. Faster Trade execution: The speed of execution of trades must be very rapid to increase your profits.
3. Simple and User-friendly Interface: The platform which you choose must be easy to understand and simple to use. It must be consistent and reliable during fluctuating market conditions. It should support trailing stops, Forex charts, mobile device, one click sales and purchase, technical indicators like momentum, support, and resistance, etc.
4. Fractional trading: The Forex platform must allow investors to trade on a fractional basis. Instead of complete lots of 300,000 or 200,000 units, it must have options to trade 215,212 units or 145,423 units so that it can be beneficial for traders who risk some percentage of balance on every trade.
Ordinarily, hefty investments earn low spread trading treatment from brokers, and mini accounts will merit high spread. During particularly volatile periods of the market, some traders will offer fixed spreads. Some brokers are open to negotiations about the spreads. And engaging in negotiations with brokers about spreads is never a waste of time. The few pips added to the price of our currency can mean the difference between losing and earning. However, the advantages of low spread may not matter when trades are not backed up by good execution.