Selection of a forex broker and opening a live account requires that you first choose the prime forex exchange account. The selection of a trading account will have an impact on your trade as it determines how much profit or loss you incur in the trades that you enter.
There is a need for you to understand how to select the best forex trading account. During the selection process, there are factors that you must put into consideration. These factors are vital in ensuring you get the most out of a trading account. They are as follows.
Factors to Put into Consideration Prior to Opening a Foreign Exchange Account
There are numerous elements that one must look into when choosing a forex account for trade. Such factors influence your decision and they comprise trading methods, level of forex trade experience, and your starting capital. However, there are more significant factors that you have to consider when choosing the best forex exchange account. This applies to all traders regardless of their status. Those factors are as follows.
1. Transaction costs (spreads plus commission)
A number of people trade the forex market to earn a profit. The trades you make may yield more profit than losses at the end of the day. However, as you enter into correct trades to earn profits, you must also ensure that you get to hold onto the profits once the trade is complete. The factor that determines whether you get your profits wholesome is the type of forex trade account you picked to trade with. That is because trading accounts vary based on the transaction costs, spreads, and commissions they attract per trade.
A spread is a difference between the market’s asking and the bidding price of a currency. It is measured in pips and fluctuates throughout the day based on the liquidity supply plus demand of your trading instrument. A spread is a transactional cost. A commission on the other hand is charged by the forex brokers for performing trades on your behalf.
The higher the transactional costs, the more difficult it would be to enjoy immense profits from your trades. Therefore, select an account that will attract a minimal transactional cost. It is vital that you consider how much the transaction costs on an account are, and how much commission the broker charges for every trade performed in the account.
2. Trading software plus platform
It is frustrating having to deal with slow and non-responsive software when you want to execute an urgent trade. Trading software or platforms provides access to the forex market where the trades are executed. Therefore, you want to have software that will give you fast, reliable access to the forex market so that you are able to execute and follow up on a trade.
The most common trading software is Meta Trader 4 and Meta Trader 5. They are more preferred by brokers as they are efficient and rarely have down time. The two trading software provide charts plus broker incorporation for a single click trading. Moreover, the two have free indicators plus charting apparatuses, real-time marketplace information, volatility security settings, expert advisors, plus mobile trading.
Hence, ensure that you pick a trading account that utilizes the best software to experience a great trade experience.
3. Range of markets available
Your trading account should give you access to international markets. That way, it becomes easier for you to diversify your forex trade and consider investing in other financial securities. For instance, you may consider trading in CFDs, stocks, commodities, and bonds.
Therefore, consider opening a live account with a broker who has access to international markets where you will stand to profit more.
Before opening an account with a broker, consider transactional costs, trading software, plus the range of markets the account will expose you to. The transactional costs should be minimal to ensure you enjoy great profits, whereas the trading software should be efficient enough to ensure the trade runs smoothly and still gain access to additional trading features. Finally, a good trading account has access to the international markets, which have numerous trading securities. This enables you to practice portfolio investment, which enables you to diversify risk.