There are more than a few things which come into the picture when it comes to trading in this market. But a fact which every single trader, even veteran traders will consider, will accept equivocally – a proper broker setup is vital if not sacrosanct to trading Foreign exchange. Question is, does every broker provide the same service or are brokers different from each other? This is just what Forex broker ratings are all about. What follows is an in-detail description of the basics behind Forex Brokers Ratings.
Variable Fixed No:
Spreads come in many shapes and sizes. When it comes to Foreign exchange trading, spreads are brokerage. It’s just the difference between bids and ask, rather, buying and selling price quotes of the same currency pair which brokers apply onto traders.
To repeat, it’s not the market but brokers who create and maintain different buying and selling prices for a single currency at the same point of time. One of the most important pointers while the rating of Forex trading brokers is the type of spreads they offer or rather impose.
It’s obvious that these spreads come in the way of profits for traders. So, from a traders’ point of view, lower spreads will allow higher profitability. But that too depends on whether the spreads are Variable or Fixed. Summing this up, when it comes to the Best Forex Broker Rating as per spreads, it’s completely investor or trader-specific.
Looking Inside Leverage:
Leverage is a central reason why traders go for an investment in Forex in the first place. With leverage, on-market profits from a transaction increase in multiples before coming up to the traders’ hands.
Leverage applies right from the point of investment. For example, if a trader invests $200 into a transaction from a trading account with 200:1 leverage, the total amount which will go onto the market is $10,000. So, a 2% profit will amount will lead to the trader getting a total of $200 as profit. Thus with a 2% profit margin on the market, a trader can get a neat 100% ROI or return of investments.
Why Higher Leverages can be Detrimental?
But there’s a catch when it comes to leverage in this Forex. Thing is, it can come back against a trader too. Leverage is one of first features which every beginner looks for in any broker. And it is also one of the most pivotal factors in world Forex broker rating. But a proper advice would be to not for the highest leverages.
These can be as high as 1000:1 but a transaction which does not come up with profits can end up truncating any traders’ Forex career. Trading in this market should be about increasing long-term ROI and not going for big high-risk profits.
Further, there’s another feature which plays a huge role in determining Forex brokers ratings – risk management services. Popularity comes from whether a broker is sensitive to a traders’ profit or loss. Only those who are provide risk management addendums.
To sum it up, these are just some of pointers basing on which Forex brokers ratings form up. For a trader, it’s about having a broker who can be positive for his/her trading.
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.