Currency Trading Account | How to Identify A Good Trading Account
When you want to enter currency trading, opening a currency trading account is a very important step. Scam brokerage and trading companies are everywhere and without proper knowledge, you can be one of their preys. Even if you managed to choose the real one, you still have to check a few factors in order to have the most benefits.
These are some factors that need to be considered when you opened a currency trading account:
1. Leverage
Leverage means the use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. In forex market, it means a loan that is provided to an investor by the broker that is handling his forex account.
Example: Leverage 200:1 where 1 standard lot is $10,000. This means that you will need $10,000 /200 = $50 in your equity to open 1 standard lot.
Different account will offer you different leverage; pay attention to this factor.
2. Spreads
Spread is the different between bids and ask price. Ask is the price when you buy while bid is the price when you sell. Different trading companies offer different spread and took compensation from it. Some other brokerages will charge commissions for each trade in addition from this spread. The higher the spread, the harder it will get to gain profit, so this is an important factor to check.
3. Currencies to Trade
Almost all trading account can support major account such as EUR/USD or GBP/USD, but sometimes there are also opportunities in other currency pairs such as NZD/USD or GBP/CHF and you may want to try that. It is only a matter of taste; if you don’t find the other currency pairs appealing, then it doesn’t matter.
4. Good Customer Support
It is important to know that you are deal with a real company with real person behind it so you will want to have direct contact means such as live chat or telephones. This is important to solve your problem as quickly as possible; sending email and waiting the response for days is not how a credible company works.
5. Software
When you open a currency trading account, some companies will provide necessary software for free, the others don’t. I’ll just go with the free ones.
6. Funding Option
Most of the companies are accepting funding in many major ways; some others only receive funding via paypal and bank. Use whichever fit your preferences and convenience.
7. Have Practice/Dummy/Demo Trading Account
In a practice account, you can get access to the trading platforms and start practicing online trading. This feature also have other uses:
- As a means to test your strategy/signals/robots. Since demo account also uses real market data, you can get accurate test results.
- As you use the demo account, you can test the platform’s user friendliness. Some platforms are more difficult to use than the others.
8. Support Many Languages
If English is not your first language, having an account with your native language can make everything easier.
Opening a currency trading account doesn’t has to be difficult or complicated; just make sure the account support all that you need in currency trading.
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