Becoming a part of the Forex trading market seems a very attractive venture for many. Considering the success stories we hear all the time online, it’s not a surprise that the interest in the Forex trading market is so huge.
Many people want to be involved in the market, but there are a lot of things that traders have to know before investing. There are numerous terms and concepts that you should know and understand before you decide to start trading Forex. One of the important things is to know the difference between important concepts.
Many beginners are having a hard time differentiating Forex brokers from Forex trading platforms. In fact, many of them believe that these two are completely the same thing. In reality, this is not true at all.
Simply put, a Forex broker is a company that gives you access to the Forex trading platform, which in turn, is special software that gives you access to the trading market. The Forex broker is a company with whom you are doing business. As for the platform, it is software where you are opening and closing trading positions to earn profits.
There are numerous Forex trading platforms available in the market. While there are some Forex brokers that offer custom trading platforms, there are others that use trading platforms made with other companies.
Some of the most popular Forex trading platforms include MetaTrader 4, MetaTrader 5, NinjaTrader, cTrader, and many others. Knowing how each of these platforms work is very important. There are numerous ways you can learn more about them, for instance, you check out this cTrader review and see how exactly it works. On the other hand, you can also open a demo account with any of the brokers that offer this platform and see how it works on your own.
Knowing how to use a trading platform can help you become a better trader. But, how do you choose which trading platform to use? That is quite a personal choice, and it all depends on your personal needs and wants in the market.
Main differences between platforms vs brokers
In the Forex trading market, a Forex broker is basically a sales representative. The main job of the broker is to negotiate on your (traders) behalf and on the buyer and sold in the market. In the majority of the cases, brokerages work with firms and companies and sell or buy assets for traders who have given them money and allowed them to use it for trading.
On the other hand, you have trading platforms, which is a completely different thing. These platforms give you, a trader, the ability to open, close, and manage your own positions. In this process, you are using the platform as the intermediary between you and the market. In most cases, you gain access to the trading platform through the broker you are using.
There are many different types of brokers in the market. There are some who give traders full control over their position, and there are others who help traders invest. Which one you choose is a very personal decision and totally depends on your personal needs and experience in the market.
How to choose a perfect broker?
There are hundreds of Forex brokers available in the market and it is not always easy to choose the best one. The decision-making process can actually be quite hard, especially if you are a beginner.
However, no matter what, the first thing that traders should focus on is the safety and security of their funds. For this, it is very important to only trade with legitimate Forex brokers. Among the many things that influence the safety and security of the broker is its regulatory status.
To guarantee the safety and security standards in the market, numerous jurisdictions around the world have come up with the idea of creating regulatory agencies. These agencies are responsible for overseeing the local trading markets. In addition, they are also required to give legit Forex brokers licenses.
In most cases, the Forex brokers that own licenses are a lot safer than the unregulated ones. So, when you are looking for a Forex broker, always check their regulatory status and see if they are following the framework closely.
After this, you should try to focus on the actual services and the offerings of the Forex broker that you are using. This includes available assets, payment solutions, trading fees, and so on. By focusing on these things, you should be able to find a broker that fits your needs the best.
But, always keep in mind that the best Forex broker to use is the one that fits your needs most. Just because one broker was named as the best one in the market does not mean that it will be good for you.
Choosing a trading platform
In most cases, there are several trading platforms that Forex brokers offer to traders. They are MetaTrader 4, MetaTrader 5, cTrader, and NinjaTrader. Now, there are many others available, but these four are the most popular offerings.
All of them are very good, but the final decision is yours to make. While there are some differences between them, they all do their job quite well. All of these platforms offer you numerous analytical tools, which you can use to better understand the price movements in the market, and they are also very useful for the actual trading process.
So, at the end of the day, it can be said that Forex brokers and Forex trading platforms are two completely different things. The broker is a company that gives you access to the trading platform, and the platform is a piece of software that you can use to open and close positions.