What Is Forex?
Foreign exchange trading or forex for short refers to the over-the-counter market for foreign currencies. This market is constantly shifting. It sees constant change due to a steady stream of government economic reports and policies that cause inflation or deflation. There may be a rapid devaluation because of currency controls or explicit devaluation of the money. This is similar to how stocks may spike or drop in value based on shareholder reports or market shifts. However, the forex market is easier to get into as a consumer. You can start investing with a few dollars. The money invested is far more liquid than money invested in stocks. Yet you have a massive market to invest in, since you can literally buy any currency in the world.
There will be more limits imposed by the trading platform you chose than the forex market itself. Here are a few tips on how to choose the best trading platform for forex trading.
What to Look for in a Forex Trading Platform
A User-Friendly Interface
It is possible to make use of binary options and complex hedging schemes. However, beginner forex traders don’t need these functions. They need an easy-to-use user interface that lets them input calls and puts in a few short steps. They need to be able to see how much they’ve invested and how much is in their account. They need a business dashboard that tells them the current price and historical data. Additional reports may be useful, but they are a lower priority for new traders. For example, it is more important to understand how much money you’ve put at risk with leverage and margin than have access to significant leverage.
Access to Your Preferred Currencies
It doesn’t matter if you want to invest in the Iraqi dinar or new digital dollars, if the trading platform doesn’t give you the option. Make sure that the trading platform you’re signing up for gives you access to the currencies you want to trade.
Connectivity takes several forms. One is the ability to connect to your account from anywhere, whether you’re using a smartphone or desktop computer. If the trading platform development team created an app as well as a website, make sure that the app works on your phone.
Another is the ability to connect to your account, transferring money in and out as required. You don’t want to be unable to access your funds when you need them, and you don’t want to be unable to take advantage of a dip in the market because it takes three days to move money from your bank account to the Forex account.
IT Security / Regulatory Compliance
Fraudulent apps and websites exist. It is easy to throw up a website promising instant approval on loans or that you’ll get rich by trading in options. How do you protect yourself from the scammers? One way is to look for evidence that they’re in regulatory compliance. You could look for brokerages that are members of the National Futures Association or NFA. If you’re located in the US, they should be registered with the Commodity Futures Trading Commission or CFTC. They should have a Commodity Futures Trading Commission (CFTC) number, not just say they are registered with it. Furthermore, the best forex trading platforms are in regulatory compliance with other country’s securities and investment commissions like the UK’s FSA or the Cyprus SEC.
Another factor to consider is their level of IT security. Do they have HTTPS? If they don’t have that on a financial website, you can’t trust it, and the banners on the site saying they meet various regulatory standards are fake. If they don’t have dual factor authentication or negative online reviews complaining about hacked accounts, don’t use their service.
You want to work with a forex trading platform that has good customer service. You want someone available when you have questions about a feature or need to undo a mistake, if that is possible. The ability to copy winning trades that you or an influencer has executed is a bonus. Don’t assume that an active user community or significant online resources are sufficient when you run into a problem, though they can help.