Best Forex Brokers for Beginners
Compare the best Forex brokers for beginners and discover the 5 things to look for in a Forex trading account for newbies.
If you're new to Forex trading, placing your first trade may seem daunting. You may find Forex trading terminology and account options confusing. This guide attempts to clear the air and narrow your options.
We've pulled together 5 features you should look for in a Forex trading account for beginners.
1. Minimum deposits
Trading is no longer the preserve of high net worth individuals. You can open an account and place your first trade from a low initial deposit. In particular, we recommend the HYCM.com Micro Account and easyMarkets.com the Standard Account which both have low $100 minimum deposits.
2. Small trading sizes
The standard Forex trading size is 1 lot, which amounts to 100,000 units of your funding currency. If you trade Dollars, 1 lot amounts to $100,000. This is large, even for seasoned investors. This is why we suggest you look for accounts with small incremental trading sizes: 0.01 lots (or $1,000) is typical for Micro accounts, and 0.1 lots (or $10,000) is typical for Mini accounts.
Very few investors fund their positions entirely through their deposit. Instead, they borrow from their broker to cover the difference between the trade's overall value and their deposit. This is known as leverage. For example, an account with leverage of 1:1000 allows you to place a $100,000 trade with a $100 deposit (one thousand times smaller).
However, you should also note that leverage is a double-edged sword, which can magnify your losses as well as your profits. You should not invest more money than you can afford to loose, and avoid over-stretching yourself through excessive leverage. For this reason, we suggest using low to moderate leverage until you are familiar with risk management strategies. Leverage up to 1:200 or less with a Standard Account from easyMarkets.com or HYCM.com.
4. Fixed spreads
If you are new to Forex trading, you may not be entirely familiar with concepts such as the 'bid-ask spread', 'fixed' or 'floating' spreads. The spread is simply the difference between the price at which you can buy or sell a currency pair. That difference may be either constant at all times, with a 'fixed spread' account; or it may vary with market conditions, with a 'floating spread' account. We think you'll find it easier to estimate your trades' profit & loss with a fixed spread account.
5. Forex education
You'll also want to choose a Forex broker that teaches you to trade like a pro.
If you're new to trading, your personal FXCC account manager can provide one-on-one training in your language. More experienced traders get great service and market insights from their personal dealer.
Others such as AvaTrade offer comprehensive online education for beginners and more experienced traders alike. Learn the fundamentals of trading, technical analysis and fundamental analysis at your pace entirely free of charge.
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