This article looks at the information you should know about forex brokers.
When you start trading on the forex market you may wonder what you should look for in forex brokers. There are certain points that you have to consider when you look at forex brokers. All of these points will tell you if the broker is the right one for you.
The Different Forex Brokers Account Types
Forex brokers offer three different account times that you need to know about. Most retail forex brokers will offer all of these accounts, but you should verify this:
- The premium account is the last type of account and is generally the ones that career traders will use. The amount for the deposit can vary depending on the broker. The leverage will vary as will the additional tools and services offered.
- The standard account will have a higher deposit minimum which places it out of the range of most average people. The amount of leverage offered by these accounts will vary because the high account balances do not really need it.
- The mini account is the one that a lot of new traders will look at. The minimum deposit needed for this account is generally quite low as they are made to be attractive to every trader. While these accounts are very attractive to most people the amount of leverage offered is quite high. The reason for this is that you need to use the leverage to make a real profit from the small deposit amount.
The Spreads You Get
The spreads you can get on a trade will vary depending on the forex broker you use. Some brokers offer lower spreads than others and you will want to go with a broker who offers the lowest spread. The spread is the price between what you buy a currency for and what you sell a currency for. The reason why spreads vary is that this is where the forex broker will be making its money. Unlike brokers on other markets the forex broker will not charge a commission but rather include their fees into the spread. The lower the spread the more money you can make and retain.
The Leverage on Offer
The amount of leverage you are offered will vary from broker to broker. The amount of leverage you need will depend on the type of trading you are looking at doing. Some brokers offer 50:1 leverage while others offer extreme leverage which is 400:1. The problem with leverage is that it increases the risk of your trade. Many traders make the mistake of using high leverage just because the broker offers this. If you have a low capital amount then higher leverage is very attractive because it allows you to make more off small amounts. You should consider your risk management plan when you look at the amount of leverage you want your broker to offer.
Any Additional Tools You Get
Many brokers will offer additional tools if you open an account with them. The tools will vary from technical analysis tools to charts. These tools can make trading easier for you.
Get a free Forex PDF PLUS:
- 14 Video Lessons
- Free One-on-One Training
- A 5000$ Training Account
- In-House Daily Analysis
- Get FULL ACCESS