The forex market is one of the largest and most lucrative entities of its type anywhere in the world, with an estimated $6.6 trillion traded globally every single day.
While this may be one of the factors that first attracted you to forex trading (along with the market’s innate volatility and inflated leverage), however, this can be a complex entity that requires you to partner with a viable broker and choose the best possible account before getting started.
In this post, we’ll ask how you can make informed decisions in these respects, so that you can optimise your chances of success over time.
How to Choose the Right Broker For You
As the forex market and its daily trading volumes have grown, so too has the number of brokers that are active in the sector.
However, not all of these are reputable and licensed brokers, so your initial search should only be focused on platforms that are fully licensed and regulated by the Financial Conduct Authority (FCA) in the UK.
Interestingly, brokers also differ in terms of the account minimums and transaction fees that are applied. So, it’s crucial that you prioritise brokerages which offer a financial proposition that suits your outlook and capital holdings, or run the risk of incurring fees that eat into your budget significantly.
There are also variations in terms of the amount of leverage on offer, and experienced investors would undoubtedly benefit from circumstances where they’re able to increase the size of their positions and potential profitability.
If you’re a risk-averse or security conscious investor, you may also want to consider how brokers protect their sites from the threat posed by cyber-thieves.
More specifically, some operators boast in-built security features such as two-step authentication, which provides a robust, secondary layer of protection that keep account information safe from hackers.
What Type of Account Should You Open?
As a new and inexperienced trader, you’ll also need to determine which type of account best suits your needs at different stages of your investment journey.
When starting out, for example, demo and mini accounts offer the best value, with the former providing you with access to a simulated market environment in which you can wager with fake currency.
Mini-accounts work in a similar way, by allowing for low-risk trades that don’t require investors to access their capital holdings all at once. With these types of accounts, you can gain practical experience of the forex market while minimising risk and building towards a brighter financial future.
Over time, you can transition to a standard trading account, which is the most popular amongst investors and may feature leverage that can grant access to lots of £100,000 or more.
If you’re fortunate (or skilled) enough to achieve sustained success and achieve profitability, you may want to consider opening a forex pro account. This is the most senior and diverse account type, and one that will immediately offer you access to a broader range of currency pairs.
Of course, it will cost a little more to access this type of account, but this is compensated for by higher margins and greater potential profit.
The good news is that you can transition between different accounts as your experience and profit margins grow, and it’s important to make decisions that suit your knowledge and experience levels in real-time.