In this financial market, you will have a choice of thousands of forex brokers. To ensure that you choose a suitable broker, there are a few points you should consider.
Most forex brokers offer at least two types of accounts. The smaller one is the mini account which does not require a very high initial capital investment. This type of account normally comes with high leverage levels.
The standard trading account offers you different levels of leverage, but your initial capital investment will be much higher. There are brokers who offer their clients premium accounts. These accounts require very high initial investment amounts and offers different leverage amounts. The premium account normally includes additional services and tools. You should carefully consider the type of account you require by determining the amounts of leverage, tools and services you need.
The spread is calculated in pips and this is the variance between the price at which you can purchase a currency and the price at which you can sell a currency at some point. Forex brokers do not normally charge commissions and this variance is how they earn an income. The difference in spreads varies from one broker to another.
To ensure that you are secure against potential bankruptcy, it would be better for you to sign up with a broker who is registered with the regulating body in your region. In the US, the Futures Commission Merchant and the Commodity Futures Trading Commission are the two regulatory bodies brokers should be registered with. In Australia, the regulatory body is the Australian Securities and Investment Commission. The details about the regulatory body the forex broker is registered with can normally be found on its website or that of its parent company.
Forex brokers offer different trading platforms for your use. The platforms normally offer real-time news and data, real-time charts and the tools for analysis of the charts. Before you register with a forex broker, you should request a trial of the trading platform they use. This is normally possible by opening a demo account which allows you access to all the facilities of a live trading account. The one main difference is that you will not be trading with real money in your demo account. This gives you the opportunity to become familiar with the trading system and to test certain aspects of your normal trading routine.
Forex Brokers Margin Rules
If you are using leverage which is borrowed money, your broker has a say in the level of risk you can take. This means that your broker is at liberty to sell or buy when it sees fit. You should clarify the margin rules your broker has in place before you register an account.
What to Avoid
As in all forms of business, you always find the scammers and fraudsters. You should avoid forex brokers who are involved in sniping. This is the act of prematurely selling or buying currencies near its preset level. These acts are often carried out by brokers, but none of them will openly admit to doing it.
To try and find the most suitable broker, it is best for you to discuss your needs with fellow traders who may be able to refer you to a suitable brokerage. There are several online trading discussion forums where you can request help in finding a trustworthy broker.
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