How to Pick an Online Currency Trading Platform.

If you want to trade currencies online, you are going to need an online forex broker- that´s clear enough. But how do you choose one, when there is so much on offer online? Well, that´s where we hope we can help you. We´ve detailed some of the criteria that we use below to rank the various online forex brokers. Before we feature a currency trading platform on Online Forex King, we road test the service and put the results in our forex broker reviews so that you can see the strength and weaknesses of each platform.

Things to look out for include the following:

The Online Trading Environment
Test the trading screen. You should have easy access to the following:

  • Real-time currency exchange rates for multiple pairs
  • A summary showing your account balance with booked and unbooked profit and loss
  • Details of available margin and the current gearing you are using in open positions.
  • Charts across multiple pairs
  • News
  • Chat
  • A resource section to learn- you should always be learning!

Most sites offer a web based trading platform (no download, uses Flash) and a desktop app (faster to run, but you need to download software). It´s up to you which one you go for. We tend to use the web based systems first, and then migrate onto the desktop clients if we end up spending more time on the platform. The desktop apploications generally have more tools, so if you are into technical analysis, you will need to download the full package.

Look for traders who offer real time prices and the ability to make trades fast. You should have access to analytical tools- charts that you can adjust the timeframe at the very least, with the option of more advance statistical research for when your skills grow.

What´s Your Trading Level?
Another question you should be asking yourself is: “What is your level of trading?” Many brokers offer mini accounts, in which you can trade with as little as $100 or so.

Available Currencies
Check which currency pairs they offer. Many brokers now offer the option of trading commodities & metals as well (such as gold, silver, oil). Make sure that the broker at least offers the major currencies: AUD, CAD, CHF, EUR, GBP, JPY, and USD.

Trading Costs
When you execute your trade, there is a difference between the buy and sell price called the spread- this is how brokers make money. The lower the spread, the cheaper it is to trade. Normally for eurusd, the price is around 3 pips and can go down to 1 (a pip is the smallest unit of price movement on a currency pair).

Margin, Gearing, Leverage.
The lower the margin requirement, the higher the leverage or gearing available. So for example, if you invest $100 in a trade on a gearing of 1, you would invest $100 in the market. If you invest at a gearing of x10, you would buy $1000 worth of currency, and if you invest at x100, you would buy $10,000 worth of currency. That does not mean that your exposure is $10,000. Beacause you should be able to set a “Stop Loss” at $100 to ensure that your position is closed if it goes $100 into the red.

Check the available gearing, but just remember, that trading with a x400 gearing is highly volatile, and not recommended for new traders. Stick to x50, x25 and x10. The proce swings are amplified by gearing. This means that if the market turns against you, it does so in 5th gear with the overdrive on!

The greater the gearing, the higher the potential for higher profit. BUT, the more likely that you will get wiped out when the market turns on you.

Minimum Trade Size
If you are just starting out, you are not going to want to start with trades of 100,000 units- you are more likely to go for a trade of 1000 units (or a “lot” of 1000 units). On the other hand, if you are an experienced trader, 1000 units lots (known as micro lots) won´t really float your boat. So check the minimum and maximum trade size and see if it matches your requirements.

Hours of Work
The forex market operates from 21:00 GMT Sunday night to 21:00 GMT Friday night. EST Sunday through 4:00 pm EST Friday. Make sure the broker is open all the time and investigate whether you can carry any positions over the weekend, or whether they are automatically closed. We prefer the former.

So, to Summarise

1. Check the spreads.
Lower spreads means cheaper trading, of course. But the broker offering the lowest spread is not necessarily the best match. It´s just one criteria.
2. Fast execution
You want to be able to open and close poition at speed so that you don´t lose any money. you may need to test this, ultimately, with a real trade account.
3. Good analysis
Charting should be free and easy. We recommend going with a broker that allows you to grow into the more technical analysis as you become more skillfull
4. Gearing.
The broker offering the highest gearing is not necessarily the best. As long as they offer up to x100, we would say that is fine.
5.  Deposit bonuses.
Many brokers now offer an additional bonus on your first bonus. This can be a nice extra, but don´t make it your key criteria when making your choice.
6.  Fast payouts.
The broker should payout any profit fast, and into a payment mechanism of your choice. Check the payment mecahnisms beforehand. Many brokers now offer Paypal and web wallets like Neteller which are convenient for some traders.

Fundamentals and Technical Analysis in Currency Trading