Forex Video Text Version
In our last lesson we continued our series on choosing a forex broker, with a look at how to evaluate the transaction costs a trader will incur depending on the broker he or she chooses. In today's lesson we are going to continue this discussion, with two additoinal factors to consider before opening a forex trading account, trading technology and value added services.
Once a trader has an understanding of the financial stability, regulatory environment, and transaction costs of the firm they are considering trading with, probably the next most important thing to understand, is the trading technology and value added services that the firm offers.
The one thing that I can tell you is universally important to all traders in terms of trading technology, is platform stability. As a traders platform is his lifeline to the markets, if the trading platform crashes, freezes up, or experiences other technological difficulties, then this obviously significantly hinders a trader's ability to perform. Where quality of execution is open to a lot of interpretation, whether a firm's platform is stable or not is pretty straightforward, so I have found that the broker review section of forums such as Elitetrader.com are a pretty good indication of who is strong and weak in this area.
Outside of platform stability, I can tell you from experience that there are as many different priorities traders have for trading technology, as there are trading styles and personalities. To help each individual trader go about this decision making process in as structured a manner as possible, I have come up with a list of features, which traders can rank in order from highest to lowest priority. Remember that many firms offer multiple platforms, so don't simply assume that a firm does not have something, simply because it is not featured on their website.
1. Ease of Use
2. Profit and Loss Report Clarity
3. Advanced Order Entry
4. Trading from Charts
5. Backtesting
6. Web Based Platform vs. Downloaded Platform
7. Platform Customization
8. Mobile Trading
If you have other things that interest you, then simply add them to the list in order of priority, before checking out the different options that are available to you.
From a value added services standpoint, there are also a wide array of different options available depending on which firm you select. With this in mind, you should also have a good understanding of what is important to you as a trader before beggining your search, and I have included a list similar to the one above, to assist you with this process.
1. In house research
2. Third party research
3. Realtime News
4. Trade Signals/Recommendations
5. Charting Package Options
6. Managed Accounts
7. Trading Education
That's our lesson for today. You should now have a good understanding of some of the main things to consider from a trading technology and value added resources perspective when choosing a forex broker. In our next lesson we will look at what are in my opinion the last two major factors to consider, available account types and customer service.
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