Account Details
Every forex broker has a different account offer, including:
Leverage and Margin: Forex participants have access to various amounts of leverage depending on the broker, such as 50: 1 or 200: 1. Leverage is a loan given to margin account holders by their broker. For example, using 50: 1 leverage, a trader with a $ 1,000 account size can hold a position worth $ 50,000. Leverage works well by traders with a winning position because the potential for profits greatly increases. Leverage can, however, quickly destroy a trader's account because potential losses will also increase. Leverage must be used carefully. (To learn more, see Forex Leverage: Double-Edged Sword and Add Leverage to Your Forex Trading.)
Commissions and Spreads: A broker makes money through commissions and spreads. Brokers who use commissions may charge a certain percentage of the spread, the difference between the bid and ask price of the forex pair. However, many brokers advertise that they do not charge commissions, and instead make money with wider spreads. For example, spreads can be fixed three-pip spreads (pip is the minimum unit of price change in forex), or the spread can vary depending on market volatility. EUR / USD quote from 1.3943 - 1.3946 has a three pip spread. That means that once market participants buy at 1.3946, the position has lost three pips of value because it can only be sold immediately for 1.3943. The wider the spread, the more difficult it is to generate profits. Popular trading pairs, such as EUR / USD and GBP / USD will usually have tighter spreads than the pair traded thinner.
Initial Deposit: Most forex accounts can be funded with a very small initial deposit, even as low as $ 50. With leverage, of course, purchasing power is far greater than the minimum deposit, which is one reason forex trading is very attractive to traders and investors new. Many brokers offer standard, mini and micro accounts with various initial deposit requirements.
Ease of Deposits and Withdrawals: Each forex broker has a specific withdrawal and account funding policy. Brokers can allow account holders to fund accounts online with a credit card, through ACH payments or via PayPal, or by wire transfer, bank checks or business or personal checks. Withdrawals can usually be done by check or by wire transfer. Brokers can charge for good services.
