Since the start of the COVID-19 pandemic, forex trading rates have been up, with new people exploring investment opportunities among international currency markets.
This is a surprising growth area, given that historically forex markets haven't seen much growth. In fact, over the last decade, average daily volumes have increased by less than 40%, while there have been reports of 300% growth between March and June 2020 alone – but it can't all be ascribed to the pandemic.
The other major change: a substantial increase in tools available to forex traders, and in order to be successful, new forex investors need to choose the right platforms.
How can investors tell if they're working with the right technology for their investment needs? There are several key elements at play, and no single right answer. Examining the following features, however, can offer investors at every level insight into what tools best suit their needs.
Location, Location, Location
While forex trading is up overall since the start of the COVID-19 pandemic, one of the most popular plays has been to bet against the U.S. dollar, and that strategy is relevant to choosing which platform to trade with.
For example, while Spotware's cTrader is broadly popular, because its servers are located in the U.K., U.S.-based traders hoping to short their own currency can face slower execution speeds. On the other hand, IC Markets primarily processes trades through dedicated lines or the central NY4 data center, which means lower trade latency times.
Available Forex Pairs
Investing is always contingent on access; you don't go to the NYSE when you want to trade Softbank, which is listed on the Nikkei, and a similar principle is true for forex traders.
You won't find the same spreads on every platform, so it's important to choose carefully. FxPro lists 10 more forex pairs than IC Markets, for example, but IC Markets has the lowest spreads coupled with lower overall commissions and funding fees. That means those investors focused on cost should opt for IC Markets because they'll save money by doing so, unless they want to trade one of the handful of pairings not listed there – but it's not always about the money.
Newcomers to forex investing need straightforward, low-cost tools for navigating the marketplace, but over time that may not be enough. More advanced forex investors often pick their platforms based on the ability to develop watchlists and view detailed analytics, such as currency histories.
With a higher cost and more complex tools, platforms like eSignal are excessive and even confusing to newcomers, but ideal for experienced, detail-oriented investors.
Boosting Income And Expertise
New forex traders include a large number of people trying to make up for lost income, as opposed to those building on previously established investment experience. That means the most important characteristics of any forex investing platform is ease of use and low costs.
With persistence, however, some may choose to migrate to more complex platforms. It's all about balancing available pairings, costs, timing, and necessary skill to find a forex trading program that meets the specific investor's needs.
Larry Alton is a professional blogger, writer, and researcher. A graduate of Iowa State University, he's now a full-time freelance writer and business consultant. Currently, Larry writes for Entrepreneur.com, Inc.com, and Forbes.com, among others. In addition to journalism, technical writing and in-depth research, he's also active in his community and spends weekends volunteering with a local non-profit literacy organization and rock climbing. Follow him on Twitter (@LarryAlton3), at LinkedIn.com/in/larryalton, and on his website, LarryAlton.com. Read Larry Alton's Reports — More Here.
© 2021 Newsmax. All rights reserved.