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Are you looking forward to day trading contracts of differences (CFDs) for various financial instruments? Well, it provides a low investment route into trading since you don’t own the underlying asset but only speculate on its price movements.
Day trading is a trading methodology based on the period you hold a position open. Traders engaged in day trading never leave a position open overnight. They capitalize on small market movements during the day. Trading time frames may be as short as a few minutes or a few hours.
There are essential factors that day traders consider when selecting brokers. You will learn all about them today, but first, let’s start by expounding on “what is a Forex broker?”
What Is a Forex Broker?
Understanding the nature of a Forex broker requires that you examine the role they perform. Quite simply, they facilitate the purchase and sale of financial instruments. When you place a buy order, for instance, the task of the Forex broker is to find a matching seller.
Two main classes of Forex brokers exist and include market makers or dealing brokers, and non-dealing brokers.
What is the Best Forex Broker in the UK?
You will not face a shortage of options when it comes to finding Forex brokers that operate in the UK. That’s why the foremost skill you need is the capacity to evaluate them. Here are all the fac2tors to guide your selection:
1) Legal status
It’s paramount to work with a licensed broker that has attained permissions from regulatory bodies. These bodies differ from country-to-country. In the UK, the Prudential Regulation Authority and the Financial Conduct Authority are tasked with protecting consumers by regulating financial service providers.
Your Forex broker of choice should also have obtained an operating license from the relevant financial regulatory commission in its home country. You can mainly find such details on the site’s footer section.
2) Leverage amount
With the relative stability of major world currencies like the US dollar, the price shifts between currency pairs such as the EUR/USD are very slight.
You are required to trade with thousands of dollars to make noteworthy profits. But by using leverage, it’s possible to open positions with borrowed money. For instance, leverage of 1:500 means that you can open a trade worth $50,000 by using $100.
When choosing a trading broker, many day traders consider the leverage offered. Some platforms even provide leverage of 1:1,000.
3) Market execution
Prices change within a split of a second. For instance, you may want to open a sell position for the EUR/USD at 1.18423, but in the time it takes you to complete the order, the prices have already changed.
Reputable trading platforms undergo professional audits to determine their order execution speeds, slippages, and requotes. The best trading broker should have some of the industry’s fastest execution speeds.
4) Ease of depositing and withdrawing funds
Speed is critical when it comes to day trading. It’s preferable to have a trading platform that processes deposits within the shortest time, particularly in moments when your account is drained, and you want to take advantage of a trading signal.
The trading broker should support a wide variety of payment methods and have the reputation of offering quick withdrawals. User reviews can reveal the efficiency of the withdrawal process at a particular broker.
5) Trading fees
Every time you execute a buy or sell order, the trading broker subtracts a commission for facilitating the transaction. It’s one of the ways brokers make money, in addition to taking positions against their clients to fulfill trades.
You will save money by choosing a broker with low spreads or commissions. For instance, Forex time is one of the trading platforms noted for low spreads starting at 0.5 pips on standard accounts.
6) Supported financial instruments
The best broker for trading should support a wide range of CDF instruments. Most platforms will at least support all the Forex currency pairs (major, minor, and exotics).
Exemplary platforms may also allow traders to speculate on the values of commodities, indexes, cryptocurrencies, company stocks, and precious metals.
7) Type of trading platform software used
You will spend many hours in front of your computer working with the trading software provided by the broker. The default standalone software used across brokerages is the MetaTrader platform first released in 2005. It’s now available in two versions, MT4 and MT5.
Some brokers have in-house trading platforms built out of the need to offer clients more simplicity or improved efficiency. It’s also vital to consider if their trading platform is available on all devices. Find out if they have an iOS, Android, Mac OS, web, or PC app?
8) Trading automation capabilities
Many traders feel comfortable trusting proven algorithms to execute trades on their behalf. If you’re interested in taking this route, find out if the trading platform allows you to automate Forex trades.
Similarly, it’s vital, if you’re going to use complex trading systems, that the trading platform provides access to historical data with the ability for back-testing and simulation.
9) Years of experience and recognitions
Working with an experienced broker with years of experience in the market provides some level of confidence and trust. You can also check to see if they have received recognition and industry awards for excellence.
10) Access to market analysis and trading signals
The best trading broker gives clients everything they need to succeed. Big brokers have dedicated teams that carry out extensive market analysis and provide insights to traders. Check if the broker’s website has a web news portal or if they have a trading system that provides signals to clients.
11) Ability to copy trades
Copy-trading provides an avenue for inexperienced brokers to follow the moves made by experienced traders. If the platform provides the service, ensure that you screen traders to identify profitable ones, and you may need to part with some of your profits to pay for the service.
12) Platform-specific tools
The trading broker should support the full list of popular technical indicators and provide you with the ability to draw trend lines, etc.
Some platforms have exclusive tools that you will not find across the board, such as a wide range of calculators.
13) News timelines and an economic calendar
It’s expedient to receive live market news directly in your trading environment and view a calendar of upcoming and past economic events.
We’ve Made the Process Easier by Analyzing the Top Trading Broker Platforms
Simply typing “what is the best Forex broker in the UK” into your favorite search engine may not produce a comprehensive list of trading platforms.
Only companies that have significantly invested in their SEO or obtain paid ads will rank first. Checking out our recommended companies as prepared by our editorial team may yield more favorable choices. List of recommended brokers.
After selecting a Forex broker, you will need to know common Forex trading mistakes and avoid them. It’s also essential to develop a winning Forex strategy.
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