This is the fifth installment in a video educational series that aims to help forex traders make informed decisions on matters such as trading strategy, leverage, and the type of analysis techniques you should employ.
Today’s episode, which can be seen above or on the IntelligentHQ video channel, focuses on one of the most important decisions you will make as a forex trader: choosing a trading partner. Of all the considerations when choosing a broker, I consider these three to be the most important:
- Reliable platform: Glitches with a trading platform, such as pauses in the data stream or the execution of trades, can be highly frustrating. These can cause you to miss out on trading opportunities, or fail to spot an important movement on a trade that is already open, so it is important to find a trading platform that is as reliable as you might reasonably expect. Basically, if your platform is down twice a year or more, you should consider switching to a different broker. Even if you are using a third party front end such as MetaTrader, the data stream and the execution both still come from your broker, so if you are experiencing non-software issues with the platform you might want to think about switching.
- Liquidity: In the context of forex, liquidity is a measure of how many traders are willing to buy or sell a currency pair at any given time. If liquidity is low, you might have trouble placing trades in a timely fashion, which means that the price could slip between placing the order and it being executed. This can be a particular problem for people who trade news releases, such as the release of central bank interest rates or the latest employment figures. These can produce a strong movement in price, which means that most of the market is either buying or selling. If most of the market is buying, and liquidity is low, you may have a hard time finding anybody to buy from. This could lead to a delay in the execution of your trade, and you could end up missing out on profit opportunities as a result. Therefore, you should look for a broker that offers excellent liquidity at all times, especially in the period surrounding a news release.
- Personal Recommendations: Ultimately, you can’t really tell what a broker is going to be like to deal with from looking at their website. You can look online at forums and the like, but it can often be hard to discern genuine positive feedback from posts that have been placed by the brokers themselves, or people connected with them. The same goes, to a lesser extent, with negative feedback. However, if you have any friends that have traded FX before, it can be very valuable to ask them for their opinions as to the brokers they have used in the past. That way, if a particular firm has poor customer service, low liquidity, or regular technical issues, you can find out about them without having to experience them for yourself.
The Traders DNA Academy
This video series is part of the Tradersdna Academy, an online trading school that is here to help online forex traders become more knowledgeable about trading and improve their skills and strategies, with online courses, educational resources, and topic tutorials. Our resources include:
- Forex MBA – A step-by-step online foundation course in all the main aspects of forex trading. Certificates are awarded for completing a module and passing the requisite assessments. Teaching materials include detailed tutorial articles with explanatory diagrams and screenshots, videos, webinars, and workshops.
- Resources for Traders – As well as helping you to understand the fundamentals of forex trading, the Traders DNA Academy also provides students with access to further information sources, including guides to the best online trading communities, profiles of top forex industry thought leaders, interviews with traders and industry professionals, and lists of the most influential forex voices on social media.
- Platform Guides – While it is important to know the broad details of how FX trading works, strong platform-specific skills are just as important. That’s why we are providing how-to guides for some of the most popular trading platforms, including the popular Metatrader 4 software.
- Video Tutorials – Sometimes, it is better to have things explained in person, which is why we are also hosting a range of video tutorials featuring some of the biggest names in forex education. As well as reinforcing key concepts, they will also help to provide a different perspective on certain aspects of trading, helping you to craft your own forex trading style.
Previous articles in this series
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 1
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 2
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 3
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 4
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 6
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 7
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 8
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 9
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 10
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 11