Why do I need Forex Broker?

Broker – the financial institution ensures traders have direct access to the market and mostly provides a free trading platform.
In case of trading with AutomatedForexTrader one needs to download MetaTrader 4 platform. Most brokers allow traders to try out virtual trading via so called DEMO or virtual trading account. Some of them are only temporary, some might offer long term virtual money practice accounts. Via practice trading account a trader can get familiar with trading platform, trading itself, trades real time execution of both entries and exits. Moreover, and very importantly, one can try Automated trading software installation, turning it on, setting it up etc..

 

Which key factors should I consider?

Every broker works with little different Terms and Conditions. The main differences from our point of view might be seen especially at:

  • brokerage type (market maker – MM, Straight through processing – STP etc.)
  • maximum provided leverage (i.e. 1:50, 1:100, 1:500, 1:1000)
  • spreads – brokers’ fees – difference between bid and ask price of each trade
  • swaps – commissions which should be positive or negative according to the interest rate of a currencies in a currency pair
  • amount of the lowest available deposit at trading account
  • amount of the minimal possible trading volume such as mini-lot (0,1), micro-lot (0,01), nano-lot (0,001)
  • geographical regulation

 

Is it really that important if you claim AFT can work with any broker?

Yes, Automated Forex Trader can be used in any MT4 platform with any broker, which allows EA usage.
What is more important, though, is to follow and understand trading conditions offered by a broker in great detail. For example, if a broker offers leverage of 1:50, trader’s account will be blocked with larger amount from the available balance in order to perform 1 standard market lot trade than it would be in case of the same trade with leverage of 1:500. To be precise, the latter would need a trader to have 10 times lower deposit in order to perform the same trade. In other words, with lower leverage a trader using AFT needs higher volume of funds to be deposited in order to trade 3-4 currency pairs at once. Thus spread the risk into more instruments. Trading using leverage contains high portion of risk and every broker must inform publicly about it in their terms and conditions.

Lastly, if we wanted to create an ideal scheme for an AFT trader with low deposit trading account, it is worth mentioning so called micro and nano-lot trading volumes. Especially ability to trade with nano-lots enlarges possibilities of using AFT with lower volumes trading accounts. Do not hesitate to contact us if you are interested in this option or check this link for AFT compatible brokers.

 

How does AFT work out the differences in spreads and swaps with different brokers?

AutomatedForexTrader follows market moves and it is its major concern, indeed. Therefore, it is daily routine for AFT to enter and exit positions within the same trading day (intraday trading). Nevertheless, it is also normal for a market to trend hundreds or thousands points one way and  keep stagnating around the same price levels for the following weeks or months. At this point AutomatedForexTrader patiently awaits the next key market move before it continues in action.

If there is no market move or solid correction in sight, trades might be closed in weeks or even months (position trading). AFT can automatically count the size of spread and swap at each trade. Because trading with AFT is mostly long term hedging strategy offering some solid long term results, it is not that important to choose broker according to their spread sizes. Of course it is important, no doubt to that. But for most traders it is larger leverage with lower deposit trading accounts that would actually matter. Further, most trades pass far 1.1, 3 or larger spreads in terms of points before these get closed in total profit. Often it is tens or hundreds of points where 1-5 points does not seem to be any key factor. Very importantly, where AFT user can gain is at trade execution speed, size of leverage provided, size of swaps (important to watch for longer held trades). Then it is also deposit size and all the aforementioned factors.

 

Money management (MM)

What does MM have to do with choosing a broker?
It is quite common that traders beginning with AutomatedForexTrader use do not follow all the highlighted steps and instructions for AFT setup. For example, a trader does make the following mistake:

1. Setup trading account with USD 500 – 1 000
2. Using leverage of 1:1000
3. Enters initial lot trading at 1.0 standard market lot
4. Applies EA trading at 3 currency pairs

For the last 7 years, we have been constantly trying to do our best in creating the most sophisticated trader-friendly money-management rules. Unfortunately, AFT is not a blackbox and it allows experienced trader to start with any data, he or she enters.
Back to our example above, we have all agreed that in such setup, this account might succeed in doubling itself in short period as well as losing all deposited funds. Honestly, this is called gambling.
So, how would such a setup should look like to see some real and long-term living strategy?

Considering a trader cannot afford to invest more funds:
1. Setup trading account with USD 500 – 1 000
2. Using leverage of 1:1000
3. Enters initial lot trading at 1.0 0.01 standard market lot
4. Applies EA trading at 3 1 currency pairs

Considering a trader can afford to invest more funds:
1. Setup trading account with USD 500 – 1 000 5 – 10 000
2. Using leverage of 1:1000 500 (most brokers offering this high leverages will limit its use as the amount deposited increases)
3. Enters initial lot trading at 1.0 0.01 standard market lot
4. Applies EA trading at 2-3 currency pairs

For all these reasons, it is vital to read, follow, read, follow, read and trade firstly at DEMO account – it is mostly FREE of charge and it allows any trader to do your mistakes while learning without any direct cost. After you are confident with the trading platform, trading and EA options of AutomatedForexTrader you might be ready to go LIVE.

 

Summary

All in all, we do always stress that you read the terms with each broker, get to know all conditions with a broker you chose to trade with. We have some basic list of brokers our clients and ourselves trade with at the following page. If you have any question on planning to trade with AFT and not sure which broker to choose, feel free to contact us.

The most efficient environment for AFT trading can be set up properly only if a trader knows properly own risk appetite – your edge, terms and conditions of your broker and AFT itself.
We believe this article was helpful and if you need any help on how to choose forex broker, feel free to contact us.

Take time to read and understand Risk warnings associated with automated trading.