Before jumping into the world of forex trading, you will want to make sure that you choose the right forex spread betting trading station for your needs.  This is largely a personal choice, as it depends on how you prefer to see data and tools visualized and used.  Many trading platforms are similar, but some are built on newer technologies and are simpler to use, and nicer to look at.  Tip: The best way to find a newer platform is to look at the Copyright date.

The Spread

Spread betting is simply the process of betting on the direction of a market, share, commodity or currency.  If the price of oil is $100.00 a barrel, you will normally see that you can buy a barrel at $100.50 and sell it at $99.50, for example.  The difference is called the spread.  Each forex spread betting trading station will offer you a different spread.

In order to maximize the chance for profit, you want to go with the platform that offers you the smallest spreads possible – usually 2 ‘pips’, or basis points, for currencies.  If you’re using a platform which offers you 4 pip, 6 pip or greater spreads only, you might be using the wrong platform.  In the case of the barrel of oil above a pip would be $0.01, making the spread 100 pips.  This is, of course, just an example.

Leverage

Different forex day trading platform applications will offer you access to different markets, and at different leverages.  To explain this simply: you buy currencies in ‘lots’ or chunks, and each one costs a token of its full value – $2, for example. The market itself might be geared by a factor of 50x, 100x, 200x or more.  If it’s at 50x, your $2 token would be worth $100 of real currency.  Investing $20 by ‘going long’ on this currency (buying in the hope it will rise) would expose you to $1000 worth of downside risk (the risk the price will go down).  You can also go ‘short’ by selling the currency, hoping it will fall.

If the price of that currency rises by 10%, and you were invested in it without gearing, you would make $100 on top of your original investment – a clear 10% profit before fees.  However, if you use 50x gearing you only put down $20 to make a $100 profit.  This means you’ve made a 500% profit.  It sounds great, but remember that it could just as easily have gone the other way.  Gearing exposes you to much greater risk, so be sure to choose a level of gearing that you are comfortable with, and find a platform that offers the markets you want to trade at this gearing.

Market Making

The last thing to be sure of is that your chosen platform is run by a company that makes its own market.  This means that they match trades from their own inventory, and not with the trades of other brokerages or investors.  This reduces your exposure to systemic company and market risk, as there is less chance of a series of bad trades sucking liquidity from the market.