Forex Broker Spreads – Finding a Forex Broker With Low Spreads
These days, open the internet and you will find loads of forex brokers claiming to be the one to offer the tightest spreads in the industry. But watch out! The marketing babble can be deceiving. To find out the forex broker with the small or the tightest spread one must understand the spread first.
The topic of spreads is rather complex and nothing affects your trading profitability more than this. Spread is the difference between the ask price (the price you buy at) and the bid price (the price you sell at) quoted in pips. For example, a quote between EUR/USD at a given point is 1.2222/4, then the spread is 2 pips, or if the quote is 1.22225/40, then the spread is 1.5 pips.
Spread is the tool through which your broker makes his earnings. So, wider the spread, higher is the ask price and lower the bid price. As a result, you pay more when you buy and get less when you sell and therefore earn less with all your trades. The forex broker with small spreads ensures a better profit opportunity.
As a trader, you must buy currencies at a lower price and subsequently sell it at a higher price to make the whole proposition profitable. But wider spread means buying higher and having to sell lower. A half-pip lower spread does not sound like much, but it makes the difference in a big way. Now a days, software based spread calculators are there where you can find out the spread easily and how much difference it is going to make in your return.
The forex trader with small spread should also have good execution. It is the quality of execution that decides whether you actually receive tight spreads or not. Your forex broker may promise a small spread but if it is with few pips to your disadvantage or you find your request to be rejected, you receive wider spread than promised. Forex Broker Spreads
Spreads must be considered in conjunction with depth of book. On the interbank forex market, the larger the size of the ticket, the larger the spread. So a 1-pip spread on an ECN platform may not be available for all trade sizes.
As the spread policies differ from broker to broker, the forex broker with small spread must have a transparent policy. Some brokers may offer fixed spreads irrespective of market liquidity. But as fixed spreads are almost always higher than variable spread, you effectively pay more.
Some forex brokers with small spread may offer it only under specific market condition and liquidity. In their case, the spreads are tighter when the market liquidity is good but more when the liquidity is less.
In ideal situation, your forex broker with small spread should have the option of variable spread depending on your trading style. If you trade only when the markets tend to be volatile, you may accept a fixed spread, but be sure that the execution is good. Some forex brokers with small spread may offer variable spread to different clients. If so, find out how you can avail a better offer.
While seeking the service of the broker, you must learn the terms and conditions of the spread offered. It should not involve any hidden cost. You may find several reliable sites who periodically performs assessments of brokers. You can seek help of one such site before choosing your forex broker with small spread. Forex Broker Spreads
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May 3rd, 2010 at 10:25 pm
try http://www.gomarketsaus.com, they're very good
May 3rd, 2010 at 10:36 pm
The word "best" is a relative term, to which you do not illude; best spreads, best trading platform, best executions? A lot of beginners consider lowest spreads to be "best."
Whether forex brokers are "non dealing desks," I do not know, but easy enough for you to check out.
Spreads are fairly equivalent throughout the legitimate industry. That is not the most important question.
Your trading platform is most important, with a good data feed. Executions are more important than the spread, because they can eat up your penny or two spread difference on just a few trades if they're sneaky. The rules they apply are more important than any spread difference. I had one forex broker at FXDD that wouldn't take market orders in a fast market around reports. Incredulous.
Anyway, the best way to take a look at forex is to download NinjaTrader for free, and use the simulator that comes with it. The futures and forex datafeeds are free also.
http://www.ampfutures.com/index.php
The futures and forex data feeds are free. I get better fills with forex futures, but have NinjaTrader with forex spot installed on a separate computer and trade both. Futures margins are less than anywhere I've found, at $500 for forex futures and emini S&P and Dow. AmpFutures uses Dorman for their futures broker, and the Forex spot account is through Forex.com and Gain Capital. The Ninjatrader people will set you up with all of it.
I've tried several forex brokers and trading platforms, but Ninjatrader rocks, and it's free
I'm pretty sure Thinkorswim also allows trading of forex futures. In fact, most futures brokers will trade forex futures.
May 3rd, 2010 at 11:03 pm
First, you aren't going to be a talking to a broker. With forex, you will have an account with a dealer who will be taking the other side of your trades.
Second, since they are dealers, they make their money off the spread, not by charging fees or commissions.
Third, they are not banks or brokers, so there is no such thing as "proper insurance".
If you want to learn how the trades work google "forex" and you will see a list of dealers. Any legit dealer will give you a demo account free for 30 days.
Since forex is not governed by law anybody can be a forex dealer, but all the legitimate ones voluntarily register with the National Futures Association even though they don't have to because they are not actually futures brokers.
If you are looking for the best forex software, visit this site
http://Make-Money-With-Forex.org/
This software is the best software that can help increase your trading profit and user friendly.
May 4th, 2010 at 4:06 am
If you are looking for the best forex auto pilot software, check out this site
http://make-money-with-forex.org/
Here you'll find the best software that can help you to increase your profit automatically
May 4th, 2010 at 9:39 pm
No any Forex brokers that I know offering USDBHT. Most importantly, the fluctuation for this pair will be minimum comparing to the major, as such less people will trade.
May 5th, 2010 at 7:36 am
I think you'll find that they each have their own pros and cons. I personally trade with Oanda, because they have really tight spreads, although they do get larger when big news comes out. They do allow you to scalp. The only real downside is the leverage isn't that great.
Hope this helps
May 5th, 2010 at 5:30 pm
You can check Finexo's foreign exchange trading services (FOREX) in Europe are sponsored by the financial company DonauCapital Wertpapier AG (#108851) and regulated by Germany's Federal Financial Supervisory Authority, the BaFin.
May 5th, 2010 at 7:48 pm
If you are looking for the best forex auto pilot software, check out this site
http://make-money-with-forex.org/
Here you'll find the best software that can help you to increase your profit automatically
May 5th, 2010 at 8:00 pm
I don't recommend dealing in foreign exchange at all. You're more likely to lose money than gain. If you do try it, watch out for the scammers.