Choosing a Forex Broker: Eight Ways to Do It Right


While choosing an online forex broker it may be useful to keep in mind some important recommendations.Spread

Spread is measured in pips (percentage in point) and is the difference between the purchase price and the sale price at a given moment of time.

Currency trading in the FX market is not performed through the central exchange house. Therefore, spreads can be of different value depending on the forex broker. Some online forex brokers offer variable spreads; others offer two types of spread, one for the daytime and the other for the nighttime.

Some brokers define spread in linkage to other market conditions. Spread is low during the times of market inactivity but grows in the times of the market volatility. Working with the forex brokers offering fixed spread is less risky over a long period of time.

Execution

How quickly will the broker execute the order?

Do they offer automated execution?

How long can you trade before it is necessary to demand fixing a price?

Don’t they infringe on the customers’ interests while trading?

The best way to find all this out is to open a demo account and to run a personal test of the broker’s conditions.

Leverage opportunities

Leverage is the ratio between the capital available for trading and the actual capital. E.g., if this ratio equals to 500:1 your forex broker will provide you with $500 for every dollar of your actual capital. Leverage is a must in forex trading due to the fact that changes of the currency prices can be exceptionally small.

Make sure to find out what leverage the forex brokerage applies before making your choice. Many brokers offer flexible margin, which allows choosing the leverage suitable for you.

Account types

Find out whether the forex broker you have chosen has a mini account offer. Mini accounts are meant for novice traders as well as for people with limited investment capital. You do not need any large capital to start trading; it is enough to have 100 dollars or even less.

Forex Trading Platform

Good trading software provides you with the real prices you can be guided by while trading instead of just forecast quotes. The program should also show limit and stop orders and ideally will make it possible to attach them to your entry order. One more useful function in the forex trading platforms is One-cancels-the-other orders, which allows you to start trading, close the program and then get back to trading.

Working tools and additional services

Find an online broker offering reliable resources and trustworthy information which will help you to make appropriate trading decisions. A good brokerage provides charts updated in the real-time mode, tools for technical analysis, latest news and data as well as technical support of the software or website. Beware of the companies refusing to provide their clients with necessary information or a trial version before opening of a demo account. You definitely need to test the system before making an investment decision.

Support

Forex works 24/7. Therefore, your online broker has to ensure round-the-clock support. You should also find out whether you will be able to close positions over the phone – it might be necessary in case of computer pending or if internet connection is interrupted at a crucial moment. You can in a trial run contact online support of your potential broker to see how soon they will respond to your requests.

Find recommendations

Turn to your acquaintances for advice, read forums about Forex, find out which forex brokers other people use and what were the reasons behind making exactly this choice.

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