How to choose a forex broker ?
There six necessary things you need to consider to verify if a broker is suitable for your trading activities and trading goals. These include how secure your funds would be by investing in this broker. However, you can check the credibility of a forex broker by visiting the webpage of the regulatory page of the country where the broker is operating.
The next factor you need to consider is the cost of trading with the broker including their spread or commission as these determine to a great extent the profit you would make. A good forex broker will also allow you to make deposit and withdrawal easily. The broker must also have an excellent and user-friendly trading platform.
The broker you choose to trade with also needs to have a good trade execution method and reliable customer service support.
You can refer " Top Forex Brokers for beginners " article to choose a reliable licensed and regulated forex broker.
Types of Forex Brokers ( Dealing Desk, Non-Dealing Desk: STP & ECN )
a) DD - Dealing Desk
A dealing desk forex broker is a market maker. Market makers provide fixed spreads and may decide to quote above or below the real market rates at any time they choose. They are counterparty for traders who don’t buy and sell forex with the liquidity providers. These brokers get their compensation through spreads or by taking the opposite trade of their customers.
b) NDD - No Dealing Desk
An NDD forex broker offers traders direct access to the interbank market. They may be STP or STP+ECN broker. No Dealing Desk brokers allow traders to trade during financial news releases without requiring the price of currencies. They offer smaller and fixed spread. Some NDD brokers charge a trade commission for trading while others raise the spread.
c) STP - Straight Through Processing
The STP brokers allow total computerization of transaction and instant processing in the interbank market without requiring verification from the broker.
d) ECN - Electronic Communication Network
ECN brokers offer and display order book data instantly. They commonly feature the processed orders and the price offered by banks in the interbank market, and this makes the operation more transparent. ECN brokers usually charge a commission for trades and process all transactions directly on the interbank market and do not require Dealing Desk.
Type of Forex Trading Platforms / Applications
Just as there are different forms of forex brokers through which you can trade forex, there are different types of the trading platform that you can use to buy and sell. Each of these platforms comes with unique benefits and features. Your choice would depend on your trade goal and your trading strategy.
A few trading platforms used in the forex market are :
• MetaTrader MT4 structured and developed with the Metaquotes Language (MQL)
• MetaTrader MT5 structured and developed with the Metaquotes Language (MQL)
• IQ Option Forex Proprietary trading platform
a) MetaTrader 4 (MT4)
MT4 is the most preferred trading platform. It allows fast execution of trades. With this trading platform, you can quickly execute trade just by clicking the mouse on charts. The trading platform as well enables you to engage in back-testing and engage in automated trading with Expert Advisors.
b) MetaTrader 5 (MT5)
MetaTrader 5 (MT5) is the most significant MetaTrader platform. The interface looks similar to that of the MT4 platform. However, it comes with additional features. The related interface makes it easy for traders who are used to MT4 to move to the MT5 version easily. This version comes with increased technology, inbuilt features like indicators and charts. With the system, it is easy to import trade signals from the MetaTrader social network.
cTrader is an ECN platform that provides traders with straightforward access to the forex market. Spotware Systems Ltd developed the platform. This is also a popular trading platform.
d) IQ Option Forex Proprietary trading platform
One of the modern trading platforms offered by IQOption limited. The biggest plus point is that the risk factor is limited to each trade instead of risking the whole capital account ( With other trading platforms you will be risking the whole capital in the account unless the trader use proper stop loss values. )
Forex Trading School Educational Articles
All the information in the website is for educational purpose only. Your capital may be at risk. This material is not investment advice.