Forex Brokers – Why Many of the Advantages They Offer Wipe You Out!
While forex brokers appear to offer you a lot of advantages in your quest for forex profits, it’s a fact that many of them can simply help you lose. To understand why, read on…
Leverage
You can 200 or even 400:1 leverage and traders are tempted to use it all, over leverage there account and a small move wipes them out. The fact is new traders leverage up so high, they are guaranteed to lose.
You simply shouldn’t use it all, as more leverage means more risk. Leverage of 10 or 20: 1 is enough on most accounts.
Linked to over leveraging is another fatal error.
Small Initial Deposit
Many forex brokers will take just 50 dollars and this is the equivalent of flipping a coin.
Normal volatility will wipe this out quickly. No forex traders should really consider less than a $1,000 and $5,000 is better. If you want to win in a game like forex, you need to take it seriously and have a cash reserve.
Broker Research
Well broker research is not going to help you win and many of the so called freebie beginner guides and critical information to help you trade you can find online for free and is the usual cut your losses run your profits, have a plan, have discipline etc
Never choose a broker based upon support services like this.
Demo Accounts
A good idea to learn how to use the forex trading platform and that’s it.
They won’t indicate if you can win at forex trading or not as there is no pressure as any real money is on the line.
Never assume because you win with a demo account, you will win in real time.
You should only choose a broker based upon the following points:
- Tightness of spreads. This is your cost of doing business and is added to any loss and deducted from any profit, so cheaper the better.
- Trading platform. The ease and reliability of use is all you are looking for. It’s your link with the market so must be reliable.
- Security of funds. Look for brokers who have been around a while and are secure. There is no point in trading with a broker who is likely to go bust.
Today forex brokers offer better services than ever and most are market makers.
This means your trade is on their book and when you lose they win. 95% of traders lose, so that’s a lot of money they can make. Now don’t get be wrong this is a GOOD thing, as it enables them to offer some great services, low rates and superb trading facilities.
It’s up to you to get in the winning 5% and that means being sensible with leverage, your initial deposit and standing on your own two feet, with your own forex trading strategy. Keep in mind the broker doesn’t cause a trader to lose – the trader does it all on his own.
So use these great services wisely and get in the winning 5%, that’s your challenge and if you can do this you can enjoy spectacular forex trading success.
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