A spread is a difference between the buy and sell price of a currency and it is measured in pips. Forex brokers by spreads refers to a group of forex brokers that allows you to trade well on the forex market by betting on the value of one currency going up or down in a value against another. To do this, you will need to find a spread forex broker and after choosing the broker, you can open an account with them and add money to the account in order to trade with it. The next step will be to choose your favorite or currency pair of interest and compare the companies that offers you with the best spread. Usually, it is the forex company that offers the lowest spread is the best.
FACTORS TO CONSIDER BEFORE CHOOSING A FOREX BROKER BY SPREAD
1. TRADING PLATFORM
Trading platforms serves as the trader’s portal to the markets. By bearing this in mind, traders should ensure that the platform and any other software is very easy to use and navigate, visually pleasing and should also have a technical and/or fundamental analysis tool. The trading platforms should also offer avenues through which trades should be easily entered and exited.
2. NUMBER OF PAIRS OFFERED
The next factor to be considered should be the number of currency pairs available for trading. This is because only a few get the needed attention and therefore, trade with the highest degree of liquidity. The major currency pairs are; USD/JPY, EUR/USD, USD/CHF, and GBP/USD. These currency pairs tend to trade in more predictable movements and ranges; however, many more currency pairs are traded.
3. PROVISION OF DEMO ACCOUNT
Most of the brokers usually offer a free demo account so that traders can test run the trading platform before creating and funding the real account. This gives the traders the opportunity of using the platform to determine if it is intuitive, robust and user-friendly or even complicated.
A good forex broker should be governed by rules and regulations, programs or services to protect the integrity of the market. They should be able to protect the public fraud, manipulation and abusive practices which are related to the sale of futures and options and to encourage open competitive and stable futures and options markets.
This should have been the very first factor but we are discussing it last because if the other factors are bad, then offering of spread is as good as useless. Usually it is important you identify and choose brokers who have met the requirements above and offers the smallest spreads.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.