The Forex (Foreign Exchange) market is a currency market where currency pairs can be traded. It is the largest market in the world in terms of volume and is widely used even by small investors, who aim to achieve performance through online trading brokers. Let’s find out in detail what Forex Trading platforms are, how they work and what advantages they offer to traders who want to trade currencies.
What Forex Trading Platforms Are and How They Work
Forex Trading Platforms are software that allow access to the currency market to buy and sell major international currencies. Through Forex Trading platforms it is possible to invest in currencies with Contracts for Difference (CFDs), which reflect the value of the underlying asset. The great strength of CFDs comes from the convenience of the instrument, which allows you to trade either up or down on a given asset.
The important thing is to know how to make the right decisions, through an analysis carried out on two levels: quantitative and qualitative.
- The quantitative study is part of the so-called technical analysis and consists in the observation of charts and trading indicators.
- Qualitative study, on the other hand, is also known as fundamental analysis, and allows for the evaluation of those exogenous factors that can have an impact on financial markets.
How to Choose a Broker: What Characteristics Must It Have
One of the determining factors in the success of Forex trading also comes from knowing how to choose the right platform to trade currencies. One of the main characteristics that must be demanded from a broker concerns the regulatory aspect. In other words, in order to guarantee the security of operations it is important that the broker has a license to trade.
From a purely operational point of view the ideal broker must offer a wide range of services that allow traders to trade in a simplified way. For example eToro (which we will explain later) boasts a series of innovative features such as CopyTrading and Social Trading, which allow traders to copy the strategies of other traders and exchange opinions with them respectively. The possibility of trading from a Demo Account is certainly another positive aspect, as well as the presence of a customer support capable of responding promptly and efficiently to all possible doubts.
It is always advisable to use brokers that require a large amount of documents and information when registering with the platform. Although this can be interpreted as bureaucratic overkill, it actually denotes another sign of seriousness.
In the case of online trading, it is usually the case that the cost of the service is a significant factor. In online trading, there are usually two cost items that can be applied: the commissions and the spread. The first ones refer to the costs required by the broker for the services offered to investors and are fixed or variable. The spread, on the other hand, represents the differential between the purchase price and the selling price of a specific financial instrument. Being able to reduce these items as much as possible can make the difference to the success of the investment.
The Best Forex Trading Platforms
Now that the main characteristics of Forex Trading platforms have been clarified, let’s find out which are the best solutions on the market today.
The most popular broker of the moment is eToro, the absolute leading platform for social trading. In addition to currencies, eToro allows you to trade on all major financial assets, starting with a minimum deposit of only 50 euros. The eToro platform allows you to check statistics, exchange opinions with other traders and copy the operations of the most experienced ones thanks to the CopyTrading feature.
Another good solution answers to the name of Capital.com, an excellent broker that offers a platform focused on artificial intelligence and allows users to evaluate the investment with the help of technology. This is an ideal solution for those who want to take advantage of high level technical analysis on Forex, thanks also to the presence of very useful built-in charting tools.
XTB broker is another platform widely used by traders, which allows you to trade totally free of charge, without requiring a minimum initial deposit. The presence of a demo account allows even those without a background in trading to gain experience and avoid putting real money on the table.
The fourth and last broker we are going to mention is Avatrade. This is one of the best known brokers on the market, which has been able to maintain some of its historical strengths over time, while integrating new and advanced technological services. Some glaring examples are the AvatradeGo app and the AvaProtect feature, the latter of which is highly appreciated by investors because it allows them to get a refund in case of losses.
Final Thoughts: How to Avoid the Risks
The rise of the trading phenomenon has begun to force investors to improve their financial awareness. Using trading platforms to trade currencies is the best way to incorporate a component into your portfolio that can potentially generate a profit if used correctly. Before trading financial assets, however, it is important to know what the risks are and how to avoid them.
One of the best ways to avoid losing money is to turn to reliable and regulated Forex trading platforms. The web is full of unreliable and (even worse) scam platforms that promise easy gains.