The Top Four Forex Brokers

This article contends that the best forex brokers are: Saxo Bank, GAIN Capital, GCI Financial Ltd., and CMS Forex. CMS Forex accepts no commission, demands a small amount of only $200 to establish a mini account, provides users with a Free Demo account, provides leverage as high as 400:1, and has a 3 to 4 pip spread on major currencies.

Saxo Bank’s ForexTrading.com offers 24 hour online trading, streaming news from three major providers, detailed analysis from in-house experts, direct online chat to dealers, and a secure

trading environment.

GAIN Capital gives its asset managers robust technology, wholesale dealing spreads, consistent liquidity, fast execution, and access to a wide range of sophisticated tools. GAIN Capital’s proprietary trading technology today supports over $60 billion in monthly trade volume. GAIN Capital’s FOREXTrader has streaming prices in 14 currency pairs, real time profit and loss account information, sophisticated risk management tools, a variety of simple and complex order types, and full reporting capabilities.

Professional dealing practices and a service-oriented approach has earned GAIN Capital a reputation as a world class provider of foreign exchange services. Client and partners from over 110 countries currently rely on their technology, execution and clearing services, and administrative tools.

For individual investors, GAIN Capital operates FOREX.com, which offers advanced, yet easy-to-use trading tools along with lower account minimums and extensive educational resources.

GCI Financial is one of the world’s largest online brokers offering commission-free trading in Forex. GCI Financial offers Internet trading software, fast and efficient execution, and the low margin requirements. GCI Financial’s free trading software gives the investor the edge in execution, market information, and account management.

The Seven Most Traded Currencies in FOREX.

Currencies are traded in dollar amounts called “lots”. One

lot is equal to $1,000, which controls $100,000 in currency.

This is what is known as the "margin". You can control $100,000

worth of currency for only 1,000 dollars. This is what is called “High Leverage”.

Currencies are always traded in pairs in the FOREX. The

pairs have a unique notation that expresses what currencies

are being traded. The symbol for a currency pair will always

be in the form ABC/DEF. ABC/DEF is not a real currency pair,

it is an example of a symbol for a currency pair. In this

example ABC is the symbol for one countries currency and DEF

is the symbol for another countries currency.

Here are some of the common symbols used in the Forex:

USD - The US Dollar

EUR - The currency of the European Union "EURO"

GBP - The British Pound

JPN - The Japanese Yen

CHF - The Swiss Franc

AUD - The Australian Dollar

CAD - The Canadian Dollar

There are symbols for other currencies as well, but these

are the most commonly traded ones.

A currency can never be traded by itself. So you can not

ever trade a EUR by itself. You always need to compare one

currency with another currency to make a trade possible.

Some of the common PAIRS are:

EUR/USD Euro / US Dollar

"Euro"

USD/JPY US Dollar / Japanese Yen

"Dollar Yen"

GBP/USD British Pound / US Dollar

"Cable"

USD/CAD US Dollar / Canadian Dollar

"Dollar Canada"

AUD/USD Australian Dollar/US Dollar

"Aussie Dollar"

USD/CHF US Dollar / Swiss Franc

"Swissy"

EUR/JPY Euro / Japanese Yen

"Euro Yen"

The listed currency pairs above look like a fraction. The

numerator (top of the fraction or "left" of the / however

you want to SEE it) is called the base currency. The

denominator (bottom of the fraction or "right" of the

/however you want to SEE it) is called the counter currency.

When you place an order to buy the EUR/USD, for instance,

you are actually buying the EUR and selling the USD. If you

were to sell the pair, you would be selling the EUR and

buying the USD. So if you buy or sell a currency PAIR, you

are buying/selling the base currency. You are always doing

the opposite of what you did with to base currency with the

counter currency.

If this seems confusing then you're in luck. You can always

get by with just thinking of the entire pair as one item.

Then you are just buying or selling that one item. Thinking

like this will still enable you to place trades. You only

need to be aware of the base/counter concept for Fundamental

Analysis issues.

So why is it important to know about the base/counter

currency? The base/counter currency concept illustrates

what is actually taking place in a Forex transaction. Some

of you reading this, know that short-selling was restricted

in the stock market *(Short-selling is where you sell a

stock/currency/option/commodity first and then try to buy it

back at a lower price later). But in the FOREX you are

always buying one currency (base) and selling another

(counter). If you sell the pair you are simply flipping

which one you buy and which one you sell. The transaction is

essentially the same. This allows you to short-sell with no

restrictions.