The number of forex brokers in the market has grown the Cyprus crisis despite further: In Forex Account Comparison 2016 compete dozens trading houses with their platforms to attract new customers and deposits. Trader should afford high standards when looking for a forex trading account: the market is this forth. The main comparative characteristics of brokers have not changed fundamentally: A necessary condition for any Forex account should be a reliable regulatory environment and a reliable deposit insurance. Equally important will be the trade conditions, the basis of values and the commercial surface. Social Trading gains in importance and new clients bonuses have always sexy but never decisive.
Details for forex account comparison at a glance
- Broker can be divided into two categories
- Market Maker broker provide their own courses for trade
- No Dealing Desk brokers conduct orders to a liquidity pool
- Transparency on the functioning is essential
1. What makes a good forex account?
Who in this day and age in the online trading aboard and learn forex trading wants, sees itself accordingly to a suitable broker to and will soon realize that the selection appears endless. Which vendors ultimately, the choice is largely dependent on the personal preferences and goals. However, there are certain criteria that speak for or against a supplier and can help traders here who make the right decision for them. For regulation and deposit insurance applies: EU’s good core Europe is better. Not only forex broker from Germany, but also offered in Cyprus or other crisis countries are concerned, if client funds with solid banks in Germany or the UK are held. Very few brokers have entitles to receipt of customer deposits has its own banking license. The trade conditions decide together with the strategy and skill of the trader on success and failure. Even differences of 1.00 Pip in spread can mean, depending on the trading activity or cost savings of several thousand euros a month. Traders should not check the terms on commissions and spreads limit, but also take a look on the trading model of brokers.
Conclusion: When choosing a broker, many factors have an influence. Before traders open a forex account, you should first take a look at the commercial offer and the conditions. In addition, talks strict regulation by competent Supervisory Authorities for the respectability of a provider and is one of the most important criteria when choosing a broker.
2. What market models are in forex trading available?
A significant portion of forex broker is acting on the European market as a market maker. These providers make themselves all buying and selling rates, netted internally offsetting positions and secure net positions if necessary from the financial market. Market makers typically advertise with commission-free trading and very often with fixed spreads. Since the broker in this market model represents the opposite position to its customers are potentially possible conflicts of interest. Beginners are still in good hands with market makers: The provider set the minimum deposit often low and offer extensive training and learning opportunities.
Conclusion: Forex broker can be divided into two different categories in the way they operate in the rule: First, it involves the Market Maker broker which are suitable with low minimum deposits and the commission-free trading, especially for beginners. The No Dealing Desk brokers (STP and ECN) that their customers’ orders routed directly next to a pool of liquidity and finance themselves through commissions.
3. ECN or STP? What are the differences?
STP (acronym for «Straight Through Processing») refers to a market model in which forwards the broker orders of its customers to a bank pool. The passage can both directly (the client trades on the open market) as also be realized indirectly through a CFD (the broker closes on its own behalf a business with the liquidity pool from and it created following a CFD between itself and the customer). Unlike STP brokers conduct ECN broker (Electronic Communication Network) the orders of their customers not only to a pool through, but connect their customers directly to a commercial network. «Direct» in this case means that traders see the order book (Level II) and place orders directly in it and thus themselves can act as «market makers». Technically includes ECN Trading of not necessarily mean that the broker the orders in its own name sets in the network and creates a CFD between itself and the customer. ECN brokers earn their money solely with commissions. Most professional traders Forex online trading access for call upon the services of ECN brokers.
Conclusion: In the market model STP, directs the broker the orders of its customers to a liquidity pool further. The ECN-Broker go one step further and connect their customers directly to a trading network. Orders can be placed directly into the order book and distributors therefore to devote themselves to quasi as a market maker.