subject: Currency Trading Account - Make Sure You Pick The Right One [print this page] Any trader who has interest towards currency trading should know that opening a currency trading account has to be done carefully. Cheat brokerage and trading companies are in every street corner of the internet and if you don't come with good preparations, they will eat you alive. If somehow you can pass them and introduced to a real broker, I suggest you to check the broker features first to make sure that you get the most benefits from them.
These are a few aspects that need to be considered when you want to open a currency trading account:
1. Leverage
Leverage means the usage of a variety of financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. In currency markets, it implies a loan that offered for investor by the broker that handling his forex account.
Example: Leverage 200:1 where 1 standard lot is USD10,000. This means that you will need USD10,000 /200 = USD50 in your equity to open 1 standard lot.
Difference in leverage can means different profit opportunity, so make sure you have checked this factor.
2. Spreads
Spread indicates the difference between buy and sell price. Ask is the price when you buy while bid is the price when you sell. Different trading companies offer different spread and get compensation from it. Some other brokerages will charge commissions for each trade in addition from this spread. High spreads will make it more difficult to earn profits for each trade, so make sure you have check it thoroughly.
3. Currency Pairs the Allowed
Almost all trading account can support major currency pairs such as EUR/USD or GBP/USD, but sometimes there are also opportunities in other currency pairs such as NZD/USD or GBP/CHF and you may want to try that. It is purely personal preferences; if you don't have any interest towards the other currency pairs, then just leave it be.
4. Reliable Support from the Staff
It is important to know that you're deal with a true company with real person behind it so you will want to have direct contact means such as live chat or telephones. This is important to solve your problem as quickly as possible; sending email and waiting the response for days is not how a credible company works.
5. Software
When you open a currency trading account, some companies will provide necessary software for free, the others don't. Unless there are significant benefits, I suggest you just take the free software.
6. Funding Option
Most of the companies are accepting funding in many major ways; some others only receive funding via paypal and bank. Utilize whichever that fit your preferences and convenience.
7. Have Dummy Trading Account
In a demo account, you can get access to the trading platforms and start practicing online trading. This feature also have other uses:
- As a means to test your strategy/signals/robots. Since demo account also uses real market data, you can get accurate test results.
- As you use the demo account, you can test the platform's user friendliness. Several platforms are more difficult to use than the others.
8. Support Many Languages
If English is not your first language, having an account with your native language can make everything easier.
Opening a currency trading account does not has to be troublesome or complicated; just be sure that the account support all that you need in currency trading.
