Choosing a Forex Broker
- Get an Idea of What to Look For...
Choosing a Forex Broker - Get an Idea of What to Look For...
In order to trade in the Forex market you will need to find yourself a forex broker. A broker is someone who executes trades according to your wishes and earns a commission on each trade.
But there are so many brokers out there competing for your business it can be hard to figure out which one is best. This article will give you an idea of what to look for.
In the forex market, brokers are paid via the bid/ask spread. There should be no hidden fees or charges to trade. However, there may be additional charges to access certain reports and optional services.
Obviously the smaller the spread the better. Pip spreads vary by broker (and also by currency pairs), so shop around for competitive rates.
Currency Pairs Available
All forex brokers should at least have the big seven currencies ((AUD, CAD, CHF, EUR, GBP, JPY, and USD). But if you plan on trading New Zealand dollars or Danish krones, you should be sure that the broker is able to do so.
Immediate Execution of Orders
Currency prices are constantly moving up and down and any delay in the execution of your order can cut into your profits or add to your losses. Of course its possible a delay will help you, but it never seems to work out that way does it? Look for a broker that can consistently execute your trade at the price you see on your screen. An occasional delay is understandable, but if it happens frequently find yourself a new broker.
In order to analyze currency prices, spot trends, and plan entry and exit points you need access to charting and technical analysis tools. Most brokers offer basic services free of charge with an expanded array of tools for an added charge.
Minimum Account Balance
As a small investor you will need a broker that does not require a large balance to open an account. Many brokers today will let you open a mini-account with as little as $300.
The lower the margin requirement, the more leverage you have. If a broker allows you to use 100:1 leverage, that means you can trade $100,000 in currency for only $1,000.You can use margin to rack up huge profits. But don't margin yourself too much or you will find yourself wiped out fast.
Superior Customer Service
This is something traders often overlook when choosing a forex broker and later regret it when they need assistance. A quality broker should respond quickly to any question you have. They should have knowledgeable reps available 24 hours a day by phone and email.
A User-friendly Trading Platform
Some forex brokers require you to download a trading program to your PC in order to make trades. Others let you make trades directly over the web. Pick a few brokers out and sign up for a free demo account. You can trade with play money while you test out their software and see which one works best for you.