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The Influence of World Forex Broker Prices on Performance

Global forex brokers come in various types and with different policies. For example, price differences between brokers can lead to different trading performance. In other words, wins or losses can be much larger or smaller.

In addition, each global forex broker has its own policies, resulting in different trading performance, including in trading signals, analysis, and the trading software used. Forex is a decentralized market type, and this means everything.

For instance, each broker has different liquidity providers, different trading volumes, and different prices at the same time. All these differences can result in different trading performance, whether using trading signals or EA.

Differences in Prices Among World Forex Brokers

Traders typically research which global forex brokers can accommodate their trading strategies and personalities. Reliable forex brokers can't prevent traders from losses, but they won't harm traders and will consistently provide various profit-making trading tips.

There are many discussions about price differences among regulated global forex brokers. One study found that these differences can reach as much as 1.09% between the highest and lowest prices of various different brokers.

While that percentage may seem small, consider that if one pair moves 100 pips at a time, a 1% difference would equal about 0.5 pips. And if the movement is greater?

These differences often occur among regulated global forex brokers, and the differences can be even larger with smaller brokers. The impact of a 1% difference in price among brokers can be greater when using short-term time frames.

A one-pip difference on a one-hour chart is equivalent to 4.85% over that one hour, while on a five-minute chart it is equivalent to 7.2% over that period, and on a one-minute chart the difference can reach 21%.

For example, if the price moves 5 pips in one minute with most brokers, but another broker might have a 4 or 6 pip movement. This means that a one-pip difference is roughly equal to a 20% difference in the competitive price offered by another broker for the same pair.

The extent of these differences varies among brokers, as forex is a decentralized market. In fact, it is even assumed that if a broker consistently offers worse deals than others, it is offering increasingly poor deals.

It is unusual to see differences of 0.5-1 pips among various global forex brokers at a given time. If a trader chooses a broker that routinely offers unusual deals, there can be negative short and long-term effects.

Brokers Affect Trading Profits

Essentially, the broker a trader chooses can have a major impact on their trading profit levels. This is especially true when opening short-term trades (using 1-5 bars, for example), as every one-pip difference can mean the difference between a stop-out position and a successful trade, or even missing the target.

If a trader takes on too large of a position, for example, just missing it slightly can trigger a stop-out and change the course of the strategy to a loss. Even if the price moves a few pips on another broker, the result may be roughly the same since the difference isn't significant.

If a global forex broker doesn't have enough liquidity to manage the bid and ask prices they offer, traders can be negatively impacted in the long term, such as experiencing slippage, stop-outs, price reversals, and other unfavorable conditions.

One solution traders take is to use robots, automated trading, EA, and the like. While these may not work well at first and seem like a waste of money, most traders don't consider these strategies for the short term, which are generally only applicable to one or a few brokers.

So, the difference in pair prices among global forex brokers isn't the only aspect to consider. In certain situations, latency or delay issues often arise among some brokers between the time an order is given and when it is executed. This means that the order price differs among brokers without latency issues.

Again, however, such differences can impact trading performance. If the chosen broker is slower at placing orders, it is a sign that the broker doesn't support automated trading strategies or the like.

If a signal says to buy on a breakout at 1.5250 and the signal provider is a global forex broker that can execute trades quickly, the trader may be able to enter at 1.52502. That's 2/10 of a pip above the breakout.

If the broker has less liquidity or is slow to execute orders, the price may be 1.5251 (a full pip above the breakout) or 1.5152 (two worse pips above the breakout). In short-term trading, a difference of 1-2 pips is significant.

If this occurs with many trades, the results are clearly much worse and the trader won't profit as expected. It's the same as opening a trade oneself but executing the signal too late, making it very difficult to profit.

The Influence of Brokers on Trading Strategy

Basically, traders must be willing to adjust their strategies and decisions based on the chosen broker. For example, if they want to make short-term decisions based on the analysis of other traders, they must be able to make adjustments to accommodate the broker's policies.

It's important to remember that global forex brokers often have different price policies based on their regulatory coverage and services. Don't choose an unregulated broker, as this means their liquidity sources are limited, leading to increased latency issues and price differences.

So, it's essential for each trader to research brokers and not just blindly open trades with a broker recommended by another trader. The price level displayed on a forex chart is likely to differ from what the broker displays.

If they feel they can't offer competitive prices, try finding another global forex broker. Similarly, if there is a noticeable difference in high and low prices, it's possible the broker has issues that can impact trading performance.

Of course, there are also spreads and commissions to consider, as these also affect profit and loss. Essentially, the larger the commission and spread, the harder it will be for the trader to profit. Also, be sure to test strategies and open trades with the same broker.

If another trader is testing a strategy, it's best not to blindly trust it. Try applying the same test with another global forex broker to see if the results are exactly the same.