Low Spread Forex Brokers: Trading Tips and Strategies

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If you are one of the millions of people who are looking to make fast money trading currency on the Forex markets, then you must prepare before jumping in headfirst. You must learn the ins and outs of this fast-paced trading so you can make informed and wise decisions. It will start by finding the best forex broker Australia has for your needs, and everyone is different.

Your broker is going to be your gateway and knowledge base for low spread trading, and finding the right fit is essential. Getting familiar with the terms and lingo is going to go a long way, as well as learning some basic strategies to get you started. Currency trading doesn’t have to be scary, as it can be very profitable when done right.

 

What is a Spread?

You may have heard of a spread in sports, especially with sports betting, and it is similar in concept to the spread in forex trading. When looking to purchase a pair of currencies there will be two set prices, the bid, and the ask. The bid is the price you buy the currency pair, and the ask is what you must sell it at to break even.

The spread is the difference between the two prices and is normally measured in pips. Pips are equal to 0.0001 of a currency unit. Therefore the lower the spread, the less action you need to be able to make a profit. While there are pros to going with larger spreads, in our case we stick with smaller ones.

 

Why Choose Low Spread Trading?

Low spread forex trading is going to be for those people who want to be able to make money quickly, and have some daily action. You will be able to make your money, or not, and move on to the next potential profit. This type of trading is going to be very exciting for people and is why it has become so popular.

 

Average True Range

The ATR is an important number for low spread forex traders, as it indicates how much the currency is known to fluctuate throughout the trading day. It is also going to let you know the low and high points as well. If you are looking for a safe bet with low spread trading, a lower ATR number is more ideal, but not the case one hundred percent of the time.

You more commonly see higher ATR currencies with larger spreads, as there is more action to cover it. Yet, if you can find a low spread, high ATR option it could very easily be a big winner. Keep your eyes on the ATR and factor this into any decisions.

 

Look at Spread Percentages

A simple calculation can give you a great idea of how a currency pair might fair for your trading options. All you need to do is divide the Average True Range by the daily average spread of a pair, and you will get your spread percentage. For low spread trading, the lower the percentage here, the better. This is a great way to quickly analyze your options before deciding.

 

Use a Great Broker

The most important part of being successful in low spread trading is choosing the best service to partner with. You want to find the lowest spread forex broker possible, along with one that lines up with your financial goals and needs. Currency trading can be a fun and exciting way to make a profit, and pairing yourself with the proper support team is going to be essential to success.

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