Forex Trading Terms
Description of the Broker's Trading Conditions
Essential influence on a choice of the financial intermediary and the subsequent opening of a real account renders trading conditions of Forex brokers. On their list experienced players and the beginning traders, first of all, pay attention to a spread because the spread is that indicator which allows estimating expenses and profitability of each transaction.
Brokerage companies understand that smaller spreads are the most attractive to traders, therefore, choose one of two ways:
- Reduce the spread, and from each separate transaction the profit decreases, but the income from the total quantity of transactions – grows, respectively narrower spreads are profitable for clients;
- Increase the spread in the case of which the amount of the made transactions decreases, but the profit is created thanks to the exposure of a big spread.
However, trading in the Forex market and conditions accompanying it aren't limited only to spread sizes, and includes a number of options and criteria which are provided by brokers for maintaining a trading activity.
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Description of the Broker's Trading Conditions
Essential influence on a choice of the financial intermediary and the subsequent opening of a real account renders trading conditions of Forex brokers. On their list experienced players and the beginning traders, first of all, pay attention to a spread because the spread is that indicator which allows estimating expenses and profitability of each transaction.
Brokerage companies understand that smaller spreads are the most attractive to traders, therefore, choose one of two ways:
- Reduce the spread, and from each separate transaction the profit decreases, but the income from the total quantity of transactions – grows, respectively narrower spreads are profitable for clients;
- Increase the spread in the case of which the amount of the made transactions decreases, but the profit is created thanks to the exposure of a big spread.
However, trading in the Forex market and conditions accompanying it aren't limited only to spread sizes, and includes a number of options and criteria which are provided by brokers for maintaining a trading activity.
Trading Conditions of Forex Brokers
A main goal of the conditions provided by the companies is satisfaction of traders' requests, irrespective of their experience and skills in the sphere of currency transactions. Today brokers try to consider all current trends and Forex market requirements, providing a set of flexible options for carrying out an effective trading activity, informing clients in news blocks, both on the accompanying changes, and at the start of new tools and conditions. The most important trading conditions are given in this material.
- Margin Call level, i.e. the level of a necessary margin when the broker can compulsorily close open deals of the trader, without notifying the client;
- Stop Out level means the level of a necessary margin in case of which trading open deals are closed by the current broker quotes;
Types of Order Execution:
- Instant Execution when execution of the order takes place at the price offered the broker. If the broker agrees with the price, the order will be performed, in case of rejection of the price by the broker, there is "requoting" (Requote) – the broker returns back suggested price;
- Execution by Market in the case of this mode of order execution the broker makes the decision on its price, without its regulation with the trader;
- Execution on Request when the broker informs the trader on execution of the order on stated price.
- Stop Level determined in the pips(points) from market price. Behind borders of this level the broker allows to establish Take Profit or Stop Loss for the carried-out order;
- Quoting type (five-digit or four-digit). Quoting with 4 signs after a comma is the most popular, five-digit in turn, interferes with accurate visual estimation of a condition of the fast market;
- Minimum size of the deposit . When exists an option to open account with only several dollars, the beginner can practice in actual transactions, and more experienced trader to check both Forex trading strategies, and conditions of still unfamiliar company without special risks.