FOREX Broker
What to consider when selecting a FOREX broker.
The FOREX broker handles all of your trades in the foreign exchange market. If you are going to start your trading experience out on the right track you need to take the time to choose a good brokerage firm. You might assume that all brokers are about the same – that is not true. There are brokers that will trade for you and, on the other hand, there are brokers that will just transact the trades that you have chosen. There are many things to consider when selecting the right broker for you. We will take some time to examine various factors that will help you to choose a good FOREX broker.
Are FOREX brokers regulated? Well, let us say that you should only seriously consider using a broker that is registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) to help protect yourself against fraudulent trading practices. A good reliable FOREX broker will have the backing of a large bank or lending institution. If, when you are in the process of evaluating different brokers, you find one that is reluctant to give you any information regarding their stability, it is best to keep searching for another.
You will find that most FOREX brokers will not charge you a commission when placing your trade. A broker makes his money from the spread. What this means is that if the broker can purchase a currency at a certain price, they will sell you the same currency at an increased price and that difference, the spread, will be their profit. Not all brokers offer the same spread on currency pairs; take a look at the spread offered by each of the brokers you are considering. On the other hand, a broker who trades for you using their own trading system will likely also charge you a per trade commission.
Does the FOREX broker that you are evaluating have a good deal of experience in the currency-trading arena? A broker who has experience trading the FOREX market has had clients that have been happy with them and they have been able to remain in the business and grow. A good large experienced brokerage firm will offer you more security with the trading funds you have entrusted them with.
Does a brokerage firm provide good customer service? You definitely want a brokerage firm that will answer your questions in a timely manner. Post a couple of questions to the firms you are evaluating and see how long it takes to get answers to your questions and if your questions were really answered.
Brokers will offer their own trading platform; spend some time to see how easy it is to place a trade using the broker’s platform. Most FOREX brokers will provide a test account for you to use for this purpose. FOREX charts will also be provided, in most cases, closely integrated with the trading platform. Take a look at each brokers charts, each charting software will provide a selection of technical indicators. Technical indicators are generally mathematical formulas that transform price data into patterns that will then be interpreted to make trading decisions. You may eventually want to use these technical indicators to build your own FOREX Trading System.