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Forex Brokers Guide – Forex Founders

 

Which choice will best suit your trading style and plan?

 

According to the trading style that you want to use, you may find different brokers more or less attractive. Of course, some factors will be equally important to all types of trading. Examples are: dealing with a professional, competent and honest organization; reliable execution of your orders to buy or to sell; and the broker’s policy concerning your margin and possible margin calls in the event that your trading positions get to a certain level of loss. On the other hand, leverage is equally unimportant to the different styles of trading.

 

Day trading

 

As a day trader, you close your positions (stop your trades) at the end of your trading day. You then open new positions (start new trades) at the beginning of your next trading day. Because of this, factors that will be important to you in choosing a broker are likely to be:

 

  • The amount of commission charged or the amount of spread

  • Whether or how much the deals will suffer from slippage (when the price at which the deal is executed is different from the price that was announced to you)

  • The reliability and speed of the trading platform

 

The shorter the time interval during which you trade, the more important these criteria become. On the other hand, the broker’s policy on rollover is not an important factor.

 

Mid-term trading

 

Mid-term traders open positions for a number of days. Correspondingly, as a mid-term trader, your attention in choosing a broker is likely to be directed towards:

 

  • The amount of commission charged or the amount of spread (although this will be less important than in day trading

  • To a certain extent, the broker’s policy on rollover

  • To a certain extent, the reliability and speed of the trading platform

 

Spread and slippage will typically not be major issues here, as long as you avoid opening or closing any mid-term positions while news is being released.

 

Long-term trading

 

Here, positions may remain open for a number of weeks, or even months. If you plan to be a long-term trader, you’ll typically be interested in:

 

  • the broker’s policy on rollover

 

On the other hand, factors like commission, spread, reliability and speed of the trading platform will be much less critical for you, even if they still need to be at least at a minimum acceptable level.