The growth of the Internet and opening up of the Forex trades market has resulted in an era of instant fast trades. But your mouse cursor hasn’t developed a magical power to buy and sell your stock faster. You still need to partner up with the right broker.
The growth of the Internet and opening up of the Forex trades market has resulted in an era of instant fast trades. Mistakenly, many people have developed a mindset, that because they can execute a trade faster, their mouse cursor has developed a magical power to buy and sell stocks on an immediate basis. Needless to say this is not an accurate perspective of the speed of executed Forex trades.
When you click your mouse you are still completing an order to your broker. The executed trade speed hasn’t increased, it’s the speed in which we can connect to the broker which has increased. Nowadays, the broker receives your order instantly, then he proceeds to do his job of finding you the best price in the shortest time. However, no matter how fast he does his job there is still time for the market to fluctuate in between the time of you placing your order and it being auctioned.
It is a good idea in relation to the speed of executed trades, to avoid error by using a limit order to give yourself some protection against losses, during the period the broker is auctioning your order. A limit order will constrain the broker on what stock he is permitted to buy on your behalf, so that any fluctuations in the market can’t compensate your original decision.
Low or no commissionsWhilst most Forex brokers do not charge you a commission, they still do get a form of compensation. The low commission structure of brokering online is beneficial from the trader’s point of view, but consider (when selecting a broker) whether the low commission will interfere with the broker’s willingness to provide you with a good service.
Specialty BrokersThere are many commodities brokers who execute Forex trades, and Forex traders who are attempting to trade penny stocks. In the early days of online trading, specialty brokers who attempted to trade in everything without being properly prepared cost their clients quite a lot of money. Over time the training has developed. These days most brokers don’t have any interest in being specialised. Shop round when looking for an online broker. Whilst a specialty broker may have their uses if you only want to trade penny stocks, usually investors like to have a bit of diversity in their portfolio.
Selecting an online broker doesn’t have to be a painful process. It’s easy these days by doing a bit of research on the Internet to find out what brokerage firm would be right for you. Always ask questions if you have anything you need further explanations on.
Make sure to read the small print on the brokers terms and conditions policy, particularly in relation to executing enter and cancel orders. A mistake here could cost you money, it’s a good idea to also check the company policy on website downtime, broker mistakes and margin accounts.
Is the information you are receiving accurate? Is there a delay in stock quotes? Does the broker tailor his email to your investments or are they blanket notifications? Answers to these questions can help you decide whether a broker is right for you. In reality you may never get to actually speak to a real live person, so look for this information when you compare forex brokers. You don’t get the traditional personal touch of a brokerage firm with online Forex trading. So don’t sit round waiting for phone calls to discuss your portfolio.
Forex trades online have advantages and disadvantages, and for a lot of people it will come down to the type of trader that they are. We are talking about making instant decisions and being able to act on them, fortunes can be made and lost in minutes. If this sounds a bit too hectic for your peace of mind, maybe a more conventional portfolio might be in order.