The Importance Of Selecting The Right Intermediary For Forex
Forex is considered a very risky market because it is a market in the status of leveraged transactions. Choosing the right brokerage house to minimize these risks is very important. A new investor should consider that the brokerage house should be able to trade in 7 major currencies (AUD, CAD, CHF, EUR, GBP, JPY and USD). Some cross parliaments (parcels in which both currencies are in a different currency than the USD) carry extra risk and may not be used.
Spread And Transaction Costs
Transaction costs are calculated on a pip basis. The lower the number of pips in the spread, the better the investor has the chance to make that profit. The spread rates of intermediary institutions can be very different from each other. For EUR / USD, the most traded pair, you should be careful not to exceed the spread of 3 pips.
Many brokers on the Forex market publish live and past price data on their web pages, so you can compare whether the spread they apply to is fixed or variable. Fixed spread means spreading is always the same regardless of day and night.
A lot size tool can vary from institutional to brokerage. Some brokerage houses offer a mini-lot, which means a lot is one in ten. Ideally, a brokerage house also offers the opportunity for customers to have a partial lot size, which is the amount that one lot is required, as well as the undersized lot.
One of the factors that will potentially affect your trading success is undoubtedly customer support that your brokerage firm will provide. When you start trading Forex for the first time, support and reliable advice from customer service is of great importance for you to make the right transactions on the market.