Forex / CFD brokers

Online trading has been accessible to retail traders since the late '90s. The number of online brokers has increased sharply in recent years and the choice of a brokerage company is a bit complicated. However, strong competition among brokers has significantly improved the trading conditions, spreads and services offered to investors.

Nowadays, you can invest in all financial markets with one click with just one trading platform. The forex and contracts for differences (CFDs) allow you to invest in currencies, commodities, oil, precious metals, stocks and stock market indices. Thanks to the leverage effect of margin accounts, the initial capital to open an account is not very high. However, this type of account is not without risk as leverage increases the potential for both profits AND losses.

The forex-central.net website was created to advise and train professional traders who wish to diversify their investments in the financial markets. On this website, you will find: articles to learn foreign exchange and stock trading, real-time information, as well as free advice for your training as a trader. To facilitate your search (and choice of trading platform), our broker comparison lists a selection of the best online brokers offering forex brokerage services in the UK and abroad.

Traders have access to several free online trading platforms. The most popular are MetaTrader, cTrader, TradingView and proprietary platforms.

MetaTrader is a very popular trading platform that is offered by many online brokers. It offers a wide range of financial instruments, including currencies, stocks, commodities and indices. It is also available in a mobile version for traders who want to trade on the go. MetaTrader has advanced trading tools such as technical indicators, customisable charts and automated trading algorithms.

cTrader is another popular trading platform that offers advanced features for traders. It offers an intuitive user interface and powerful trading tools such as advanced charts and automated trading algorithms. It is also available in a mobile version for investors who want to trade on mobile devises.

TradingView is a trading platform that allows traders to view and analyse financial markets in real time. It offers advanced charts, technical indicators and market research tools. It also allows traders to create and share trading ideas with the TradingView community.

Proprietary platforms are developed internally by online brokers. They are designed to meet the specific needs of each broker and can offer unique features for investors and traders. Proprietary platforms often feature advanced features such as custom market research tools and automated trading algorithms.

Types of brokers to invest in the stock market:

1. Full service brokers
2. Discount brokers
3. Zero-commission brokers
4. Neobrokers

Types of brokers to trade currencies and CFDs:

1. Market maker brokers
2. ECN brokers
3. STP brokers
4. DMA brokers
5. Hybrid brokers

Types of cryptocurrency exchange platforms:

Centralised exchanges are the most common and popular. They are used by companies and are managed by a central authority which ensures the operation of the platform and the security of trades. Users can buy, sell and trade cryptocurrencies using the cryptocurrency trading platform. Centralised exchanges can offer great liquidity and a wide range of trading options, but they are often subject to strict rules and regulations and can be vulnerable to hacker attacks.

Decentralised exchanges are based on blockchain technology and have no central authority. Users can trade cryptocurrencies directly between themselves with zero intermediaries. Decentralised exchanges can offer greater security and privacy, but they can be more difficult to use and often have lower liquidity than centralised exchanges.

Hybrid exchanges are a combination of centralised and decentralised exchanges. They often use blockchain technology to provide increased security and greater transparency, while retaining some of the benefits of centralisation, such as high liquidity and ease of use.

Peer-to-peer exchanges allow users to trade cryptocurrencies directly with each other, without any intermediaries. Peer-to-peer exchanges offer greater privacy and flexibility, but they can also be riskier than centralised exchanges because there is no guarantee of transaction security.

The currency market - also referred to as the foreign exchange market or forex (FOReign EXchange) - is the most popular and the most liquid in the world, over 6 trillion dollars are exchanged every day between different traders and financial institutions. There are multiple short-term opportunities in a trending currency pair, and an unparalleled level of liquidity that makes opening and closing trades quick and easy. Forex does not have a central market, which means traders can trade five days a week 24 hours a day.

Stocks - By speculating on stock prices through CFDs (contracts for difference), traders can also profit (and lose) from falling prices via short selling. Margin trading (or leverage) also reduces the capital required to open a position. You can therefore open a position on a recent press release, product announcement or financial report - as well as on technical indicators.

Stock indices - A stock index measures the general performance of a market or sector. For example, the FTSE brings together the 100 largest British companies. Stock indices can be used to invest in a country's overall economy or to serve as benchmarks for investors to measure the performance of their own investment portfolio.

Exchange Traded Funds (ETFs) - An ETF is a basket of securities that you can buy or sell on a stock exchange through a brokerage firm. Exchange-traded funds are offered for virtually every asset class imaginable, from traditional investments to so-called alternative assets like commodities or currencies. In addition, innovative ETF structures allow investors to short (sell) markets, use leverage and avoid taxation of short-term capital gains.

Commodities - Commodities are products or goods such as metals, foods, energy, etc. To invest in gold, silver, platinum, palladium or in commodities such as crude oil and gas, you can speculate on their prices through contracts for difference that replicate the price of the underlying asset. You can also invest in physical precious metals to invest for the longer term.

Cryptocurrencies - Currently, the most popular digital currencies are Bitcoin and Ethereum. Dramatic growth has seen cryptocurrencies attract many new investors. Brokers also ensure that individuals' access to cryptocurrency trading is simple. Entering into a trade on one of these new blockchain-based currencies is becoming easier and easier. The barriers to entry are now almost zero, so whether you are a bull or a bear, now is the time.

Government bonds - These bonds are basically a loan. They are similar to an IOU in that when you buy bonds, you are lending money to an entity (typically a government, business, or bank) that issues the bond (issuer). A bond can be bought and sold in the secondary market, its value can fluctuate due to a number of factors such as movements in interest rates and the perceived creditworthiness of the issuer.

Contracts for difference (CFDs) - A CFD is a contract whereby one party will pay the other the difference between the current value of an asset and its value at a future date. Contracts for difference are derivative products traded on the over-the-counter (OTC) financial markets. They carry a higher degree of risk due to leverage. They are generally viewed as short term trading instruments rather than long term investments. However, they can also be used as hedging instruments.

Stock trading account - This type of brokerage account provides leverage-free investing in a variety of investments, such as stocks, bonds, mutual funds and ETFs. It is mainly used to invest for long term growth and to set money aside for retirement or for other purposes depending on the investor's profile.

A vanilla option is a contract where a seller offers a buyer the option - not the obligation - to buy or sell an underlying asset at a predetermined price on or before a fixed date. Vanilla options are one of the many alternatives that international companies can use to protect themselves against currency volatility. However, many option contracts are speculative and do not guarantee the exchange rate at maturity. For companies whose main objective is to protect their margins against currency risk, there are more effective solutions such as dynamic hedging.

A futures contract is an agreement to buy or sell an underlying asset or commodity at a future date at a specified price. Futures contracts are standardised agreements that are usually traded on an established exchange. A party to the standardised contract undertakes to buy a given quantity of an underlying commodity or a stock market index for example, and to take delivery of it on a certain date. The other party agrees to supply or deliver the underlying asset.

Automated trading (or algorithmic trading) is basically a trading strategy that's encoded within a computer program (Expert Advisor - EA) that executes orders automatically and submits them to the market or exchange. This type of trading often depends on technical analysis, but can also be based on data from other electronic sources.

Managed accounts and social trading - Some investors prefer to leave the management of their funds to more experienced traders. They have a choice of several types of accounts, such as PAMM accounts or social trading networks.

Although most traders share the same goals, they achieve them using a variety of trading styles and strategies. Trading styles can be shaped to suit a trader's time restrictions, profit goals, and personal strengths. There is no one style of trading that is better than the rest, but it's important to define your style so that all your future efforts are both organised and intentional.

Two types of transactions: Long and short

Regardless of the financial instrument used, there are only two types of transactions. Long trades involve buying to open a position (entry) and selling to close the position (exit), with the intention of selling at a higher price for a profit. Short trades involve selling short to open a position and buying it back, called a hedge, to close it, with the intention of buying it for a lower price and making a profit on the decline in price of the financial asset.

Most traders and investors are more familiar with long trades, which adhere to the “buy low, sell high” concept. This type of transaction is relatively simple and can be done with most trading accounts. Short selling, however, requires a margin account.

Two types of styles: Day Trading and Swing Trading

There are two styles of day trading, which are more or less based on the amount of time a position is held. Both styles should be managed while keeping both risk and probability in mind. The intraday style refers to a single 24-hour period or a single session from open to close. During this intra-day period, a day trader can execute scalps and/or swings. When a position is held overnight and/or for several days or weeks, it is called swing trading.

Day Trading: Scalping - Scalping is done during the day. It captures the essence of day trading, trying to trade back and forth to make profits in the shortest period of time, ranging from seconds to minutes. Scalping tends to prioritise shorter charts, like one-minute and five-minute time frames. Profit targets are also smaller in order to maintain high probabilities, to justify larger position sizes.

Day Trading: Momentum - While many day traders like to scalp for quick profits with larger positions, other day traders look for larger moves in the market. These day traders, often referred to as momentum traders, seek to profit from the larger intraday shifts.

Swing Trading: Shorter term - Swing trading uses the same principles as day trading, but with a longer holding period. Swing trading can be done intraday or daily. A short-term swing trader may focus on charts with a larger time scale, such as 60 minute charts and/or daily charts. As the trading range can also be wider, a swing trader will accordingly take on smaller position sizes.

Swing Trading: Longer term - Daily swing trading involves even wider time frames and price ranges. A swing trader can go for a higher price target using daily and weekly charts and smaller position sizes.

Two types of analysis: Technical and fundamental

Fundamental analysis refers to the detailed examination of the fundamental factors that influence the economy, an industry or a company. It aims to assess the real intrinsic value of a financial asset, by measuring economic, financial and other factors (both qualitative and quantitative) in order to identify opportunities linked to the gap between a financial asset's value and its current market price.

Technical analysis is used to forecast the price of a financial asset, which means that the price of a stock or currency pair is based on the interaction of the market forces of supply and demand. In addition, it is used to forecast the future market price, based on past performance stats. To this end, we first check the price changes on a price chart to see how the price will likely move in the future.

The difference between the two approaches boils down to what determines the value and price of a financial asset. Fundamental analysis considers the value of a company or the strength of an economy's currency. This ultimately depends on the value of its assets and the profits (or losses) the company is generating. Fundamental analysts are interested in the difference between the value of a security and the price at which it is trading.

Technical analysis is interested in the evolution of the price, which gives clues in terms of supply and demand dynamics - which ultimately determines prices. Chart patterns often repeat, because traders often behave the same way in a similar situation. Technical analysis is only interested in price and volume data.