Broker to Trading

Traders may often look for a best broker. However rather than trying to find the best broker, it can be helpful to choose a broker by features and see which are a better fit. UK Forex brokers encompass a range of features, from automated Forex trading to platforms aimed at those who plan and execute their own trades.

The main features of Forex brokers emerge from the trading platform and the account structure. MetaTrader is a platform offered at a wide range of Forex brokers. It comes in two versions. MetaTrader 4 and MetaTrader 5. As the number might suggest, MetaTrader 5 (MT5) is the successor to MetaTrader 4 (MT4) and has a number of enhancements. This said, MT4 has been around longer and is well established with Forex traders. MT4 and MT5 can be customised. There is a marketplace behind them, where trader can buy add-ons and core tools such as Expert Advisors and technical indicators.

Expert Advisors also known as EAs are online trading robots. They are simply computer programs, following a set of instructions to implement mostly automated trading strategies (they can also do other tasks). Trading strategies are a way to approach trading the complex and difficult Forex market. A strategy allows the trader to follow rules which may or may work out and gives them the possibility of refining them or using new rules. Robots encapsulate a strategy, such as trading on signals provided by technical indicators. But they apply them without needing the trader, they trade on behalf of the trader.

It can be helpful to understand what a robot is doing, that is why they are implementing a trading strategy. One way to do this is to trade without robots and use and even develop strategies. This is the core of discretionary trading. To do so, traders can use technical indicators. These are based on recurring market patterns and as such may not work. However they provide a rationale for making trades and can also work out.

Traders do not necessarily need to use indicators to perform technical analysis, and there are other approaches based on the chart, for example looking for patterns which may indicate possible outcomes. The same issue applies, that they are based on past patterns and may not work out when actually used. However it might be clearer to a trader what is happening on the chart versus what an indicator is doing. In all events, there is a wide range of books to read covering Forex trading.

Preparation may be key in many activities, and preparation for trading may involve education, which can also take place in courses as well as books. Having prepared, the trader may wish to try out Forex trading. So then the question arises of which is the best to try. However it may be the case that choosing a reputable Forex broker is a way to start and to test out their platforms and features on a demo account. A demo account is a way to trade without risking real money and can be a way to appreciate the complexity of the Forex market.

Complexity comes in many forms, particularly volatility and the tendancy for Forex pairs to retrace even if they are in a trend. Traders can take advantage of this by using retracements (eg. 'dips') to manage a trade, however in Forex, dips can turn into reverses. Fundamental analysis can provide pointers about overall market direction, for example interest rate differentials between components of a Forex pair, may provide indications of what is the more resilient pair.

However as relative valuations, retracements and volatility are always ready to alter a direction. Forex is also traded on leverage, so small changes are amplified, making for complex patterns traced out on the chart. The market is prone to many influences on a daily basis and these can alter direction, to it needs to be considered that what happened on the chart may also have had a different outcome.

Given that a broker may be better given a wide range of factors, a selection of Forex brokers is provided in the table above.