Broker to Trading

A Forex broker is a type of provider which offers Forex CFDs to trade. Forex Pairs are limited by the number of pairs which a provider can offer. However many Forex brokers have expanded to offer (as well as other markets) Stocks CFDs. This allows for a wide range of markets to be offered, increasing the total number of markets available to trade.

Forex is traded as pairs of currencies, for example EUR/USD, which is the value of Euro in Dollars. This provides a way to establish a valuation for a currency, relative to another currency.

Currency pairs are traded in the Forex market, which is vast, towering over other markets, but the number of trading markets is limited to the number of pairs which may be created, which itself is a function of the number of countries with separate currencies available.

Forex Pairs are divided into major, minor and exotic pairs. The availability of exotic pairs tends to allow for the total number of pairs offered to significantly increase or decrease. In general however, less than or in some cases greater than 100 pairs would be available.

Stocks CFDs are based on Stocks, the value of the CFD reflecting the underlying value of the Stocks asset. There are many companies, many more than there are countries. Only a relatively few are listed on exchanges, which provide the underlying assets for CFDs to be based upon. However these number greatly exceed the availability of other markets. The actual number of Stocks CFD offered depends on a range of factors.

Forex brokers as they are commonly known may not necessarily offers Stocks CFDs. However a wide range do. The number of Stocks CFDs offered is to some extent consequent on the online trading platform.

A popular third party platform is MetaTrader, currently MT4 and MT5. MT4 can offers Stocks CFDs, however the total number of markets available on MT4 is limited. MT5, which as the name suggests is the successor to MT4, can provide many more markets, particularly Stocks CFDs, due to the enhancements this platform has on MT4. Thus some providers may offer 1000s of Stocks CFDs and therefore 1000s of markets overall.

Other providers may offer another platform, for example a user friendly platform instead of or in addition to platforms such as MT4 and MT5, which may also provide a relatively large number of Stocks CFDs. If the trader is looking for a particularly large selection of Stock CFDs, they may find this at some providers on such a platform.

If both Stocks and Forex are available, these may be traded on the same platform. This means that the suite of tools available, for example technical indicators, graphical objects and trend lines can be used to help analyse these markets.

As Stocks CFDs are traded on leverage at CFD providers (increasing leverage increases risk), then they tend to be day traded, thus technical tools may provide some pointers to shorter term trading approaches.

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Forex and Stocks tend to have different bases for fundamental analysis, as Stocks offer company data to analyse and Forex has country data to provide a basis for analysis.

What is the best provider for a trader will depends on factors such as the type of trading desired, for example automated trading and the number of Stocks CFDs to trade.

A selection of providers with significant offering of Stocks CFDs, as well as platforms and tools focused on Forex trading is provided to help offer a range to choose from. They are divided into categories, an ECN Forex Broker offering Forex and Stocks, a provider with a focus on both discretionary and automated trading and a provider focusing on providing a user friendly platform for those who plan and execute their own Forex and Stocks CFDs trades. All these providers offer demo account, thus the trader can try each and see if the provider aligns well with their interests.