When you carry out Forex trading and use Forex brokers, you will notice that the brokers do not charge any commission for services provided by them unlike stock brokers. But they don’t provide free services but earn their profits by charging a “spread’ from investors and it is good to choose a low and fixed spread trading platform so that you don’t too much of your profits to brokers.
The spread is actually difference between ask price and bid price for the traded currency pair. The broker will add this spread value to trade price and will consider it as trading fee and it is like hidden commission. One advantage about spread is that you will pay it only while purchasing and not while selling the currency. A currency trading of 8 pips vs 10 pips will cost 25 percent difference on your trading expenses and this makes it clear why you must select a trading platform with low spread.
The most frequently traded currency pairs like GBP/ USD and USD/EUR have lowest spreads. Some Forex brokers charge different spread for various account types. A trading platform with low spread might not provide good mini-trading and will have high spread value than live trading account. But if the spread value is smaller on currency pair then the conditions for trading is very good for you as investor.
You may notice that online brokers provide different trading platforms using which you can sell and purchase in Forex market. You must select a trading platform which charges fixed and low spread values.
A good currency platform will show you live prices which you can trade at and not just quotes. The low spread platform must show the actual trading prices for you get clear picture of spread. While choosing a trading platform, you must think about these two below features,
1. Lower Spread: The trading platform must charge lower spread value for all currency pairs and it must be fixed.
2. Faster Trade execution: The speed of execution of trades must be very rapid to increase your profits.