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Fortrade Answers
Whether you're just starting out or you've been trading for years, online trading can be challenging due to its ever-changing landscape. Here you can find answers to the most common questions and concerns to simplify and clarify online trading.
Recent Answers
4 Essential Questions to Ask Your Prospective Forex Broker
As you'll be putting a portion of your hard-earned money into a brokerage's hands, it's important to verify the reliability and expertise of the brokerage. These four essential questions will help you know what to expect from a reliable brokerage. 1. What Does Your Service Suite Comprise? A good and reliable brokerage will offer you a suite of services that will help you with your forex trading journey, such as: A user-friendly platformAdvanced charting and analysis toolsEducational resourcesCustomer support 2. What Are Your Trading Costs and Related Offers? Different brokerages will offer different fees for their services—generally, there are three kinds of expenses that you might have to pay as a trader: Spreads: A good brokerage will offer tight spreads allowing you better trading conditions. Commissions: Most brokerages charge a small commission on each trade that you make—find a broker with low commissions to ensure better trading conditions. Markup offerings: Check the price differences in instruments between brokerages and choose one with the more suitable price. If you're trading with leverage, be sure to check the brokerage's margin requirement as this will determine how much money you'll need to put down as a deposit—a low margin requirement means a smaller deposit. 3. Are You a Regulated Forex Market Service Provider? All good and reliable brokerages are regulated, meaning they must adhere to certain rules and regulations set by the financial authority. This protects you as a trader because you know that the brokerage is held accountable for its actions. 4. What Is Your Speed of Order Execution? In the fast-paced world of forex trading, every second counts and you don't want to miss out on any potential profits because your brokerage was too slow in executing your trade. It's widely thought that a good execution time of a brokerage's trades should be less than 100 milliseconds. A good way to test how fast the brokerage is in real-time trading conditions is to open a demo account and place a few trades. » Ready to start trading? Learn more about trading with Fortrade and try out our free demo account
Asked 6 days ago
How to Trade Palladium Using CFDs in 2023
Trading precious metals like silver, gold, and palladium can be a potentially profitable venture. Namely, palladium is a metal that possesses many attractive qualities for traders, like its medium volatility and rich liquidity. As of 2023, you can trade palladium using Contracts for Difference (CFDs) with many major brokerages, but there are more things you should learn about before starting to trade this metal. Factors That Affect the Price of Palladium There are many factors that affect the price of palladium, including supply and demand dynamics, macroeconomic events, as well as market sentiment. Supply is a major factor impacting the price of palladium, as it is much more scarce than other precious metals, like gold and silver. On the other hand, the demand for palladium largely comes from its use in the auto industry for catalytic converters due to its unique properties. It's also worth mentioning that some macroeconomic conditions also play a role in palladium prices, as investors tend to buy more of this metal during periods of economic growth and stability. » Learn more about trading gold CFDs Trading Palladium CFDs—6 Easy Steps If you're interested in trading palladium, here are 6 easy steps you could follow: 1. Create a CFD Trading Account The first thing you need to do is open a CFD trading account with a brokerage that offers palladium as one of its tradable instruments. Make sure to check the fees and conditions before signing up, as they can vary significantly between different providers. 2. Identify Trading Ideas Once you have chosen the type of palladium instrument to invest in, you will need to identify trading possibilities. This involves analyzing current market conditions, looking for price patterns and trends, and studying news and other external factors that can influence the price. By having a solid strategy, you are more likely to find ways to get potential profit from palladium price movements. However, it's essential that you understand the factors that affect the price of palladium in order to avoid potential losses. 3. Consider Risk Management Tools Risk management is essential for trading any asset successfully, including palladium. Remember to use stop-loss orders and take-profit limits, as well as other risk management tools such as averaging or scaling out of your positions. This can help you protect yourself from large losses and maximize gains when price movements go in your favor. 4. Monitor Your Trades It is important to constantly monitor your trades, as this will allow you to stay informed about the performance of your investments and make necessary adjustments. Make sure to assess the reasons for any losses and capitalize on successful trades by taking potential profits when appropriate. 5. Close Your Position Once you are done trading palladium, it is time to close your position. So, do your best to pick the right moment and use a good exit strategy to maximize your profits or minimize losses. Is Trading Palladium Profitable? You should have the right knowledge and strategy if you consider trading palladium CFDs in 2023. You should pay close attention to factors that influence the price of this metal, use risk management tools properly, and be sure to keep an eye on your trades at all times. » Want to increase your trading knowledge? Check out our CFD trading courses for beginners and advanced traders
Asked 6 days ago
5 Ways to Avoid Slippage in Trading
In forex trading, slippage refers to the difference between the trade's execution price and the expected price. Of course, slippage happens in all asset classes and market conditions, but it's particularly frequent in markets with elevated volatility. Causes of Slippage Usually, there are three main causes of slippage: High volatility In times when the market moves too fast, slippage can be quite big. In other words, if there are a lot of purchases on the market, the price can move quite drastically in a short amount of time, causing large slippage. Low liquidity When an asset is illiquid, traders might have difficulty opening and closing trades. Because of this, the price of an asset might be much higher/lower when the trades get executed. Tech Issues and Inconsistencies Once you decide to open a position, the request gets sent to the brokerage's server and gets processed. However, these trades aren't executed simultaneously, as there is often a delay of 50-100ms, known as latency. How to Avoid Slippage There are a few ways to avoid slippage—or at least reduce the chances of it happening too often. For starters, here are five things you can try: 1. Avoid Volatile Periods By avoiding high volatility periods, you'll be able to reduce the amount of slippage you encounter. This is particularly for scalpers who open and close positions extremely quickly. 2. Choose Markets with Low Volatility and High Liquidity If you want to avoid slippage, opting for markets with low volatility and high liquidity is recommended. This can help you get in and out of trades quickly and with minimal impact on your trading account. 3. Use a Boundary Order A boundary order allows you to set a certain amount of pips above and below the current price. If the market crosses this boundary, a trade will automatically be opened. This allows you to start trading without having to worry about slippage too much. 4. Apply Stops and Limit Orders to Your Positions Most brokerages offer you the option to place limit and stop orders on your trades. This helps you avoid slippage by ensuring that your positions are only opened and closed at the exact price you specify. 5. Find Out How Your Provider Treats Slippage It's important to know how your provider treats slippage. Many brokerages will adjust the opening and closing prices of a trade to make sure you don't suffer too much slippage. Be sure to check these policies about your brokerage before you start trading. Can You Avoid Slippage? Slippage is an unavoidable part of trading, but the risk can be reduced by following the tips outlined in this article. By avoiding volatile markets, trading with high liquidity, and using specified orders, you could greatly reduce the amount of slippage you experience when trading. » Need more help? See our trading ebooks and video tutorials
Asked 15 days ago
Defining Margin Call in CFD Stock Trading (+ 5 Tips for Avoiding It)
While margin trading—using borrowed funds from a brokerage to trade—is certainly a popular method for trading stocks, it is not for everyone, especially those just starting out. The basic rule of thumb is that if you are trading stocks, commodities, or forex with three months of emergency savings or a down payment for a house, you should not be trading. Many people are looking to save toward a long-term objective, so margin trading is not something to take lightly. What Is a Margin Call? A margin call occurs when the brokerage sees that your margin account is running low on funds, typically because of a losing trade. Instead of allowing the funds to run dry, the brokerage will demand additional capital to keep the trades open. So, generally, it is your responsibility to enhance your account equity by depositing more money into your account or liquidating your other holdings. Also, if the market is extremely volatile like it was in 1929, 1987, 2001, 2008, or 2020, you might be forced to close your positions at depressed prices, even if you do not want to. How to Avoid a Margin Call So, how exactly do you avoid a margin call anyway? Consider the following five tips for avoiding a margin call when trading: 1. Don't Use Borrowed Funds Using borrowed money when you are in the middle of a bull run might seem like a smart move. But when stocks slip into a bear market, your account will be crushed. Do not invest in CFDs with money you cannot afford to lose. An investment in CFDs carries a high degree of risk to the investor and, due to fluctuations in value, the investor may not get back the amount they invested. 2. Try to Use Less Than the Maximum Margin Offered by the Brokerage It can be tempting to maximize your margins if offered by the brokerage, but this is highly risky and can result in significant financial ruin. 3. Monitor Your Account By having a margin account, it is your responsibility to regularly keep track of your accounts and make sure that you are adapting accordingly, whether buying at your price target or selling when it is in freefall. 4. Avoid Volatile Securities and Diversify Your Portfolio One of the best ways to avert a margin call is to stop investing in volatile securities when a frenzy occurs. Moreover, diversifying your portfolio with low-risk securities, from utilities to index funds, might be a good idea. 5. Take Advantage of Price Alerts and Stop-Loss Orders Finally, use price alerts to your advantage by being notified if the stock has reached a level where you are comfortable buying or selling. In addition, stop-loss orders consist of placing an order to automatically close your position once the instrument hits your specified price point. Final Words The existence of margin trading shows why everyone needs to have some extra cash on hand in the event of a margin call. Even an extra one or two percent in an easily accessible savings account can potentially prevent a financial disaster. Fortunately, there are ways to avert a margin call—and they all include being aware of the market and being responsible with your money. » Want to improve your CFD trading knowledge? See our trading ebooks and video tutorials
Asked 19 days ago
Margin Calls: What They Are & How to Avoid Them
One of the most popular things traders like to do is to trade on a margin, i.e., use leverage with their trades. Leverage is an incredibly powerful tool that allows you to control much more instruments than you can buy, however, trading with leverage comes with risks—one of which is getting margin called. What Are Margin Calls & What Triggers Them? A margin call is a demand from your brokerage to bring your account up to the required level of equity. This happens when the value of your position decreases and drops below your initial required minimum level of equity, whether it’s due to adverse market movements or because you held onto a losing position for too long. When this happens, the brokerage will require you to deposit more money into your account or liquidate some of your positions in order to bring the balance back to the required minimum. If you don’t meet this demand, the brokerage has the right to close out any and all trades that are in a losing position, which might be harmful for your portfolio. 3 Ways to Avoid Margin Calls 1. Have Capital on Hand The best way to avoid margin calls is to make sure you always have capital on hand. This will ensure that your account equity never drops below the required level, and you’ll be able to remain in control of your positions even when markets are extremely volatile. 2. Utilize Stop Loss Orders Using stop-loss orders is also a great way to avoid margin calls. This order type allows you to set a specified price level for your position to be automatically closed if the market moves against it. This way you can effectively protect yourself from any sudden and unexpected losses. 3. Trade With a Risk/Reward Ratio By trading with a risk/reward ratio of at least 1:2, you can drastically reduce your chances of getting margin called. Trading with this ratio means that you’re willing to risk twice as much profit in order to make one unit of profit—which effectively reduces the amount of risk you're taking. It’s always best to practice trading—choosing a proper trading strategy and being aware of the risks associated with trading on margin can help you avoid costly margin calls that may do more harm than good. » Ready to start trading? Discover how to open an account with Fortrade
Asked 21 days ago
