The exchange acts as a counterpart to the trader, providing clearance and settlement.
Questions and Answers
Have a look through the following questions and answers section of this guide to Forex Broker banking options for there are going to be a handful of banking methods listed below that will be of inertest you much more so in regards to the fees and charges they do or do not impose on you when using them. You are always going to find that you can use a debit card to find any Forex trading account, in fact this is the most convenient banking option to use as there are going to be no additional fees or charges lumped onto your deposits and of course all payments are processed instantly and in real time.
Be aware that you are also going to be able to have your withdrawal credited back to the bank account that is linked to that debit card and when your bank is part of the fast payments system you are going to have those winnings credit back to your bank account very quickly too. Can I Use a Web Wallet? Quite a number of Forex traders prefer to use a web wallet or an e-wallet such as a Neteller , Paypal or Skrill account to use as their preferred banking option.
By using one of those wallet services you can then keep all of your trading funds in one place. Plus when you wish to make a withdrawal from your Forex trading account you will be able to do so and have those funds sent back to your web wallet quickly, and it will ensure you are never going to mix up your own personal day to day funds with your trading funds which you may do if you use a bank account or debit card to make deposits.
You are sadly going to find that when you choose to use a credit card as the way you fund your trading account you will often be forced to pay quite a number of different fees and charges. As most credit card issuers have now decided that any transfers made into a Forex trading account are deemed to be cash advances then you will be forced to pay a small percentage of your deposited funds when using a credit card as a cash advance fee.
Also you will of course be faced with paying interest on any money you use from your credit card to fund a trading account if you do not pay off your credit card on time when the bill is sent out to you. However even though it is the largest market in the world, there is no central exchange for it.
Consequently, forex traders have to rely on the services of a forex broker to help them execute a trade. That is why it is so important to choose the best trading partner for you. So what do you need to consider when choosing a broker? Before all else, the first thing every beginner trader must check when looking for a trusted and reliable broker is to see if the broker is regulated.
As the forex market is an unregulated market, having a forex broker that is regulated ensures the broker will operate with transparency and fairness. It is important to note that regulatory oversight for a forex broker is only applicable for the jurisdiction that the broker is based in.
For example in the U. These regulatory agencies main functions are to protect the interest of investors as well to develop the rules that dictate how forex brokers should conduct their operations. Most important of all, regulatory agencies constantly monitor the conduct of the brokers under their jurisdictions to prevent any kind of abusive practices, fraud and manipulation on the part of the brokers.
By doing so, these regulatory agencies help to promote competition and instill trust in the forex market. So before you decided to open a trading account with a forex broker, ensure that it is regulated by one of the regulatory agencies listed below:. Finally many regulators offer an investor compensation scheme which protects the investors deposits up to a certain level should the broker become insolvent and become overly exposed to the markets.
The next thing that you have to evaluate in a beginners forex broker is their trading platform or software. It must also have a wide range of trading tools which you can use to help in the analysis of the market. Most useful tools for beginners are clear charts, a streaming news source and even an economic calendar, giving upcoming economic events.
In addition, you must also ensure that trade entries and exits can be done effortlessly. This means that the interface of the trading platform must be well designed with all the functionalities clearly labeled and strategically placed. A trading platform with a poorly designed user interface can actually impede trading which can lead to costly mistakes.
For example instead of closing a position, a poorly designed trading platform can cause you to add to a position. Or it can cause you to go long on a position when you really intended to go short. At the end of the day, all these mistakes will just cause you more frustration and drain you emotionally. Make sure that the broker offers you a reliable trading platform such as the MetaTrader 4 platform or the Sirix WebTrader.
As a beginner trader is also important to know that brokers usually offer mobile versions of their platforms. This is great when you are on the go, as you never need to lose trading opportunities. All forex brokers make their money through the commissions or the spreads which they charge their clients. For commission based trades, the commission is usually a fixed amount per lot traded or a percentage of the total volume traded. For spread based trades, the forex broker generally markup a few pips in the difference between the Bid and Ask price.
It should be noted that the spread can be fixed or floating. Take note that the wider the spread, the more difficult it is for you to make a profit. All leading forex brokers offer their clients a selection of trading accounts for their clients to choose from. These accounts are typically differentiated by the benefits which they offer the account holder but they vary between the different brokers.
The foreign exchange market forex or FX for short is one of the most exciting, fast-paced markets around. Until recently, forex trading in the currency market had been the domain of large financial institutions, corporations, central banks , hedge funds and extremely wealthy individuals.
The emergence of the internet has changed all of this, and now it is possible for average investors to buy and sell currencies easily with the click of a mouse through online brokerage accounts.
Daily currency fluctuations are usually very small. This makes foreign exchange one of the least volatile financial markets around. Therefore, many currency speculators rely on the availability of enormous leverage to increase the value of potential movements. In the retail forex market, leverage can be as much as