If you have finally taken the decision to start trading forex, the first step is to choose a proper forex trading platform, and let me tell you; it’s no easy task for a beginner. There are a lot of factors that you need to consider, and that is why this article will act as a guide for you throughout this journey. There are plenty of platforms in the market to choose from, but one decision can make or break your trading success. Here are some things you should check or keep in mind.
Step 1 – Figure Out Your Trading Style
Your trading style will speak a lot about what trading platform you should ultimately settle for. Some of the factors that often make trading styles different are trading frequency, the amount of time for which you hold a position, how you time your entries and exits in a trade, and so on. There is another broad classification that is usually done whenever we are talking about trading style – position trading and intraday trading.
So, if you are a position trader, it means you are going to hold your position for quite some time and not perform trades so frequently. In that case, you should look for trading platforms that offer you good educational resources and a broad range of assets. Access to resources will ensure you are always on top of the latest forex trading strategies. On the other hand, if you choose intraday trading, you will probably be using a lot of stop-loss orders. In that case, you need a trading platform that will ensure you guarantee order fills; otherwise, even a minor order slippage can lead to a huge difference.
Another factor related to the trading style that you should keep in mind while choosing the platform is the negative balance protection feature. If you plan to put your account at risk frequently, you need this feature; otherwise, in case the trading position doesn’t work out the way you had planned, you can easily go into debt.
Step 2 – Decide On The Features You Need
Even superficial research of a couple of trading platforms will reveal to you that not all of them have the same features. In fact, they can each be quite different from one another. So, the best way to narrow down your options is to first decide what features are an absolute must for you. Here are some things worth considering –
- Opting for trading platforms that offer ECN or electronic communications networks, often charge a commission and have tighter spreads.
- All forex trading platforms in the U.S. should be under the regulations of the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA). Similarly, every country has its own regulatory body.
- The forex trading platform you choose should have customer support in your preferred language otherwise, you will face a communication gap whenever you try to make them understand the problem you are facing.
- For any beginner, one of the things they should look for in trading platforms is whether they are offering clients learning materials. This will give you fresh ideas and also access to high-quality market analysis.
Step 3 – Consider Your Budget
Last but not least, you should also keep your budget in mind. It would be completely impractical for you to choose a trading platform without even taking into account the amount of money you are ready to spend. For example, you should check the commissions that the broker is charging. If you plan to be an active trader, you will obviously want a platform that will have lower commissions. Moreover, check the minimum margin deposit requirement and see whether you have enough funds to meet that. Sometimes, the platform has a margin deposit as low as $25, but some might need you to deposit as much as $10,000, and that kind of money might not be suitable for everyone’s budget.
As a newbie in the world of forex trading, you definitely have a steep learning curve ahead of you. So, make sure you devote as much time as possible to researching the fundamentals to build a strong base – it will serve you in the long run.