Debt Dictionary


Investment Dictionary -> FOREX

The Forex market is similar to the equities` market. Some important differences exist, however. Two or more accounts are offered by majority of the brokers.

When one decides to trade on the Forex market, he should choose a broker. In this regard, here are some things to look for:

- Low spread it is the difference between the purchase price of a currency and the price at which it can be sold. This difference shows how Forex brokers make money while they do not charge a commission.

- Quality institution Forex brokers are unlike equity brokers who are normally related to the lending institutions or the banks. The reason is that a large amount of capital is required for operations. They are registered with the Futures Commission Merchant

- Tools and research A wide variety of trading platforms are offered by the Forex traders. Among them are the technical analysis tools, real-time charts, support for trading systems, and real time news and data. It is a good idea to test different trading platforms by requesting trials prior to committing to any broker. Economic calendars, as well as fundamental and technical commentaries are often provided by the brokers

- Leverage options ranging widely the price deviations are just fractions of a cent the leverage. Leverage represents the amount of money a broker will lend one, shown as a ratio between the available total capital and the actual one. A broker will lend to the borrower one hundred dollars for every dollar of actual capital when the ratio is 100:1. The risk of a marginal call is lower when the leverage is low.

- Types of Accounts - The mini account is considered to be the smallest type of account. It has a required minimum of $250. The Mini offers a high leverage amount, which one is going to need in order to trade with such a small amount of capital. The standard account has initial capital minimum requirement of $2000.

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