When you look at trading on the forex market you need to know how to get the best forex rates. It is important that you understand what these factors are and how you can get the best forex rates with them. These factors will include the spreads you get from your broker, the leverage you are able to use and the time you are trading.
The Spreads that You Get
It is important that you consider the spreads that you get from your forex broker. There are two ways that spreads can be offered and they will give you the best rates depending on how you trade. The two ways spreads are charged are fixed and variable.
Fixed spreads are often considered better for short-term trading because you know how many pips you need before you are profitable. Of course, there are times when variable spreads are better because they are tighter and do not cost you as much. Variable spreads are considered to be better for long-term trading because these trades can compensate for wider spreads. The large movements of these trades mitigate the effect of the spreads on the profit.
Forex Rates and Leverage
While leverage does not actively affect the rates you are getting is can affect the profit you make from it. When you look at leverage you should ensure that your broker allows you to adjust the amount you use when you are trading. There are some brokers that offer 20:1 leverage that has to be applied to very trade you open.
This kind of broker should actually be avoided as there are times when you will not want to use the maximum amount of leverage. Fortunately, these brokers are rare and most allow you to change the leverage you use on each trade.
Getting the Rates that You Need
When you are trading possibly has the largest impact on the rates that you are going to get. All currency pairs have times when they are liquid and volatile and times when they are not. It is important that you find out when you r currency pair will be doing well. When a lot of traders are trading your currency pair this increases the liquidity and volatility. At these times you are likely to get the best forex rates and spreads for the pair.
A rule of thumb that you can use to determine when these times are would be to look at the market sessions. The rule is that in the market session of the country the currency will trade the best. This means that the Australian dollar will do best during the Sydney market times. This is why you have to know about the 4 market sessions that make up the 24 hour market open times.
There are three overlaps that you also have to know about. At these times the market is most volatile, but the one you have to focus on is the London and New York overlap. At this time the highest numbers of traders are online and most currency pairs will become more liquid and volatile. The currency pairs to focus on at these times are the ones with the US dollar, the Pound and the Euro in them.