Forex: The pros & cons and how to choose your trading platform
Forex trading is increasingly widespread among investors and speculators. However, this operation involves a series of pros and cons. Do you know which ones they are? In this article we’ll also guide you in choosing your Forex platform. So…keep reading!
* Forex trading: the most outstanding benefits
The benefits of trading Forex are quite attractive. Therefore, it is not surprising that it attracts more and more investors. These are its advantages:
No centralized market
Although this offers some disadvantages, it also has benefits: in the absence of a central market, operating costs are low. By not having bureaucracy, the costs are very low.
Transparency and speed in executions
Orders are fast and in all cases find a counterpart in a short time, something that does not happen in the stock market.
The Forex market is transparent: it is impossible to manipulate it.
All types of financial operations
There is no restriction for trading: it allows you to go long, bet short or sell in a few seconds.
Available 24 hours
In the market, you can get liquidity 24 hours a day and, in the case of cryptocurrencies, all week.
Leverage and margin accounts
These accounts can allow us to operate with more capital than is available in the account. You can earn a lot of money trading Forex, even investing small amounts.
* The cons of Forex
Although not as many as the advantages, there are disadvantages:
It is not a regulated market
The foreign exchange market is not regulated. Therefore, we must be clear that Forex trading with currency exchange is a huge market that crosses borders. This is one of the reasons for applying a type of regulation that covers a large area.
However, different central banks such as the ECB or the FED do carry out supervision, but it is impossible for them to keep everything under control. To reassure you as an investor, yes, we must bear in mind that the most prominent players in the market do have regulation: financial entities, intermediaries, financial institutions … all are subject to the regulation of each country.
There is no central market
The lack of a central governing body requires that all operations be carried out with an agreement between the parties, but… what if there are problems between the parties themselves? In this case, there is no body that can resolve the possible discrepancies that may arise. This lack of control in one market can cause problems that do not occur in other markets, such as the lack of information about the volume being traded or there may even be price differences.
Finally, another situation that this type of market has is that many of the operations are against the intermediary. In a market that is organized and fully regulated, this cannot happen. The operations should be forced to the market, but in these cases it is not and, furthermore, there is no obligation that it should be so. Visit Forextime to get moren info about this.
Leverage: a danger
It can also be a great disadvantage. It is not necessary to make a minimum deposit in the account, nor for the total of the operation that has been opened. With a minimum capital we can win or lose a lot of money at once. Poor risk management can turn trading into an ordeal in no time.
Forex trading has pros and cons that, as an investor, you should know. In all cases, we recommend having a Forex trading course.
* Now we’re going to the second topic: How to choose a trading platform
Any trade requires good tools so choosing your trading platform is something you have to do carefully as it will largely determine how your trading will be.
Therefore, before even knowing which is the best trading platform for you, you will have to take into account different parameters. What underlying do you operate, what data do you need to analyze the market, what functionalities should your tool have.
How to choose a trading platform?
A Forex trading platform is the most important work tool for an investor who decides to operate financially in the market. You need it to be intuitive and easy to use, to focus on what is important, the market.
In order to choose a platform, we must analyze the characteristics offered by each one and opt for the one that best suits our profile. How do we do this?
The platform that best suits each one must comply with:
Be simple and intuitive: you have to try the demo version and, if you find it too difficult, opt for another.
Be reliable: consult opinions, forums and above all test it.
You have the assets you want to invest in and access to various types of markets (indices, forex, commodities, cryptocurrencies, stocks, ETFs, …)
Be quick to execute: a fundamental virtue in trading.
It is continuously updated: to have a platform with the right tools.
Be compatible with our Software (Windows vs. Apple), and its possible use on tablet and mobile.
It has several important functionalities for one: instruments and basic elements that you must have: charts, real-time indicators, automatic trading system, sound signals, being able to trade from the chart … and custom settings.
Have open programming code that allows you to create / modify / customize the programming of scripts and indicators.
Backtesting possibility: to be able to test trading strategies with historical prices through the parameters.
Trading platform vs broker.
It is important to know the difference between the platform and the broker. It must be remembered that the broker is the intermediary that acts directly between us and the stock market; The trading platform is the work tool (software) through which we will operate and launch orders. We are going to try to give you an overview of the trading platforms currently available, where we find multi-broker platforms (developed by third parties and offered by more than one broker) and platforms owned by a single broker, which entail a decrease in freedom if you want to change between broker and are not usually as developed as the others.
Ranking of the best platforms
The truth is that in most other websites you will see a ranking surely based on the agreements they have by affiliation with those platforms or brokers
A generic ranking cannot be carried out, since there are several possible operations and a great diversity of tool options, so we are going to give an overview of the available trading platforms based on certain analysis and market criteria. In addition, the list has been limited by the platforms that, according to our vision, provide more reliability.
Best platforms for trading volume and futures (multibroker)
Probably if you trade with volume and futures your trader profile is a little more technical than the average, you should know then that the trading platform you choose must also have the necessary functionalities. Here are some examples:
MT 5 improves on its little sister (MT4), since in addition, it allows you to trade futures and stocks in cash, in addition to having more indicators, market depth, and MQL language to create your own indicators. On the other hand, MT5 allows copy trading or also using robots.
Payment platform. But it is also one of the most complete and is designed for very experienced traders. It is multitasking and its features are perfect for conducting technical and fundamental analysis. It has a spectacular graphics system and has more than 180 indicators, which can be customized to suit the consumer.
Now you have understood what the Forex is. Be wise and control your emotions.