Article from forexlive.com
Traders often come across what they associate as ‘endless possibilities’ in the world of trading.
Interestingly enough, displayed across the bottom of most retail trading sites is a disclaimer that reads something like, “76% of retail investor accounts lose money when trading”. The number for each broker is different – it’s based on the performance of their clients – but it’s usually pretty high, ranging from the high 70s to the 90s.
That’s why choosing the right broker is the only way to stay one step ahead. Brand-new FCA-regulated, innovative FX firm, TIOmarkets, has put together a guide on how to keep trading costs to a minimum amid an incredibly volatile market.
From commissions to spreads, to account funding and withdrawal policies, all of these factors have a say in how much you lose and how much you earn.TIOmarkets is launching full throttle onto the forex scene on the 28th of May, fully loaded with its unique subscription packages. But, to get started, here are some basic rules that can save you potentially thousands of dollars on the cost of trading.
Rule #1 – Keep your commissions low
For every transaction that takes place, the broker will charge a commission.
From the moment a position is open, the first thing that is deducted from the trader’s account is the commission the broker charges.
In order to make a profit, the position should move in the right direction by minimum the amount taken for paying the broker’s commission.
But the trader should remember that commission goes up with volume! The bigger the volume traded, the higher the absolute commission charged. In other words, if a person trades 0.1 lots and their commission is 0.9 USD, on one lot, they can expect the commission to be proportional.
While commissions cannot be escaped, given that brokers will naturally need to charge something for their services, traders should learn how to interpret a commission and incorporate it as a regular cost that comes with any transaction.At TIOmarkets, their best and most elite subscription takes zero commissions for a small monthly fee. Meaning the trader only pays once, and then never has to factor in commissions for any of their trades for a whole month.
Rule #2 – Find a broker with low spreads
Low spreads = more money for the trader.
Even without commissions factored in, the trader will start every trade “in the red”, or making a loss. In order for a trade to become profitable, the trader needs to cross the spread in the direction they are trading. For example, if you buy EURUSD at 1.23150 and their spread is 1 pip, they need to wait for the price to move up to 1.23160 for them to break even and not be losing on their trade.
For this reason, lower spreads are important to move out of the red and into the profit zone quickly and more often.
It’s especially important for day traders and those who open and close multiple positions per trading session.
Be careful though, as many brokers who advertise “low spreads” compensate by charging high commissions on each trade, or by requiring a high-deposit account.
No-nonsense FX firm, TIOmarkets, is offering the same low spreads to everyone, and don’t sneak in hidden charges either.Their trading fees are some of the lowest on the market. That’s low spreads across all major, minor and exotic currency pairs.
Rule #3 – Do your homework
As mentioned above, there’s no point being sold on “low spreads” or “low commissions” only to be hit with high and unexpected charges somewhere else.
Traders must do their research. In order to consistently perform as a trader, they’ll need to understand all of the charges involved.
Traders are encouraged to know exactly what charges they’re in for – spreads, commissions, deposits, withdrawals, support – be in the know to avoid being suddenly short on balance.
Once the trader has done all of their homework, signed up for a demo account, done their practice, and, most importantly, put a trading plan in place, it’s time to go live.
Once the trader is on the right track, it’s time to start trading with real money. Although, it’s strongly advised to start small when going live! Make a deposit, a few trades, and a withdrawal to uncover any hidden charges.TIOmarkets promises no hidden charges. Instead, they’re offering one low monthly fee in return for huge cost savings on the other side, and other exclusive benefits.
Rule #4 – Find a reputable broker
Forex trading is booming. And while the number of online and mobile trading platforms continuously increase, we slowly see the barriers to entry decrease.
And this is the exact reason why partnering with a reputable broker is crucial, because it’s the only way for a trader to protect themselves against malpractice that could wipe out their account.
It’s no secret that the unregulated forex market is full of bad actors who are looking to profit by offering a poor or rigged service.
These brokers are able to manipulate prices and spreads to ensure traders don’t make a profit, or find reasons to withhold their withdrawal.
Traders are encouraged not to fall for the scams scattered across the forex market. If it seems too good to be true, it probably is.