Because Forex Operates 24 Hours A Day, Your Broker Should Offer 24 Hour Telephone Support

Category: Finance, Currency Trading.

A common question asked by retail currency traders who are new to the forex trading business is that of the commission charged for trading. A pip is the smallest price increment, usually the third or fourth decimal place after the unit price.

Whilst there are some Forex brokers that to charge a small commission on the trade, a common practice amongst the forex brokers is to charge what is known as the spread, which is where a forex broker makes his money. For example, a change from 9456 to 9458 is a change of two pips. So if you re given a quote of 9456 as a sale price or bid price and 9460 as the buy price or ask price, that is a difference of four pips or a four pips spread. The spread can be described as the difference between what is known as the asked price and paid the price, which refers to the price at which a particular currency is bought or sold at any given time. When you execute the trade, you will start off with a deficit of four pips which is the forex brokers spread. Some people evaluate the broker based on the spreads that they charging across a particular pair or a selection of currency pairs.

Therefore, each time you trade, you will need to make up usually between two and five pips in order to start going into profits and making money in Forex. It is important to check whether the spread is variable fixed because during particularly volatile times in the market, for example important economic announcements/ news a variable spread will make it near to impossible to make money during these times. This is because of the large amounts of money that are involved in trading on the forex markets. A forex broker may advertise itself as being under the auspices of a large bank, institution or lending organisation. If the forex broker is in America, the Commodity Futures Trading Commission is the regulatory body dealing with merchant registration. Two weeks should be sufficient time to evaluate the platform.

The author finds that in addition to evaluating the spread offered and whether or not it is fixed or variable, bearing in mind that one should be finding trades that way outperform what is required to be spread anyway, it is useful also to test a demo account, so that the platform that the broker offers, it additional features and functions, the speed of execution and other factors can be gotten used to. As stated, and majority of forex brokers do not charge a commission but instead learn from buying and selling, converting and holding, interest on deposits currencies and fees for overnight rollover, i. e. they are active as currency dealers, and this is where their renumeration comes from. As previously stated, the spread is where the broker" makes his bones" . The forex dealer broker acts as a middleman between the retail investor and the interbank markets. There is arguments amidst disgruntled forex traders on the markets that some Forex brokers are Forex scams and do not operate in a fair manner, so it is important to choose wisely. Telephone support is important because the Internet is not completely fail proof and therefore if there is a problem with either your platform or your system and you need to take action on the trade that is currently open, it s important that you are able to use the telephone brokering to manage your trade in an emergency.

Because Forex operates 24 hours a day, your broker should offer 24 hour telephone support.