Monday, 2 July 2012

Low Spread Forex Brokers

When you start your Forex trading you will find that the Forex brokers, do not ask for a commission for their service. But of course, they do not perform their operations for free. They make money by charging a "spread" from the investor. It is therefore very important to find out a low spread Forex trading platform.

The first thing you'll need is a low spread Forex trading broker. These companies don't typically ask for a commission or transaction fee. They don't provide a service for free either. They make their money on what is called the spread. This is the difference between the bid and ash price of a currency pair.

Although you may read how there are no commissions with the Forex, that really isn't true. It's just called a spread instead of a commission. Brokers still make money on transactions. All of the brokers have spreads.

For example, if you were to buy and then immediately sell a currency pair that had a 3 pip spread between the Bid and Ask price, you would be down 3 pips. This occurs even if the market price is exactly the same when you buy and when you sell.

One minor difference between stocks commissions and FX spreads is when you pay it. For currency pairs, you pay it when you buy. With stocks, you pay when you buy and when you sell.

You want to find a broker that has a low spread on the top two currency pairs. Chances are, you will want to focus your trading on the Euro/U.S. Dollar and the Great British Pound/U.S. Dollar. So, check out the spread amounts with these two pairs. You will definitely want a low spread for these. A spread of 3 Pips is what I currently pay.

If you're like me, you will be generating trade signals yourself through automated software. Because of this, you will want to find a discount broker to ensure you are getting the lowest spread prices possible. There's no need to pay high spreads from regular brokers if you are a hands on trader.

A small deposit requirement is something you should look for as well. With the right trading system, you should only need a few hundred dollars to start trading. There are lots of companies who only require deposits of $250 to $500.

While seeking the service of the broker, you must learn the terms and conditions of the spread offered. It should not involve any hidden cost. You may find several reliable sites who periodically performs assessments of brokers. You can seek help of one such site before choosing your forex broker with small spread.

So there you have it. Low spread Forex trading is changing the lives of thousands. It can do the same for you. Your next step after finding a low spread forex broker? Get yourself a trading system that is easy to use and makes consistent profits.

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