Beginner’s Guide to Online Forex Trading – Chapter 11: Choosing a Forex Broker
Before you begin Forex trading, it is a good idea to set up an account with a Forex broker. A broker will be able to steer you right in the process of Forex trading. A broker can be either an individual or company that assists you in buying and selling orders. They inadvertently buy and sell orders based on your specifications. Forex brokers earn their source of payment through charging a certain percentage or fee for their services.
There are a few specifications that your Forex broker should possess:
Choosing a broker
It’s not easy to find the right broker for you, there are so many that the market is positively saturated. So how can you know how to choose the best broker for you? These are the following things you should look into when choosing a broker:
You should ask the firm what their transaction costs are- this will impact your profit and loss, especially if you are making lots of trades each day. Does the firm rely on commission instead or are they offering a fixed spread like this firm? If so perhaps they will take it out of the spread and cover commission on your losses.
The broker cannot give you advice on your trades, in reality you’d probably not want it anyway- after all if they were such good traders then surely they’d be trading for themselves? They should be able to offer you good resources though to help make your decisions eg. daily and weekly market research, fundamental analysis such as an economic calendar and live quotes.
As well as being available 24/7 the broker needs to offer a user friendly platform which makes executing orders simple and instant. You can test drive the broker’s platform more often than not by opening a demo account. It gives you the same conditions as if you were trading with real money. Have a go yourself download a demo account and practice your trading. The Meta trader 4 platform is the most common and popular platform. See what you think about it.
You should choose a brokerage firm which has been around for a fairly long time, with a good reputation and be well capitalized. You should check how quickly you can withdraw and deposit funds. It should also have a good support service, this is often a good indication of how well your trades will be executed. So a good tip is to send an email to the support and see how quickly they respond. If your computer goes down during a trade you should be able to phone the firm to execute it on your behalf. A good brokerage firm is more valuable then you might think. You can often find reviews of brokerages on websites and forums- worth doing some research before you jump in head first.
The last and one of the most important things you need to evaluate in finding a Forex broker that will assist you in the market is to not ignore any fine print. The Forex market is run 24 hours a day, ensure that the broker corresponds with the time that the market is ran. Ensure that you have proper means as to how to contact the broker if you have any questions concerning the Forex market. Quality can differ from broker to broker; before you open an account evaluate everything that the broker promises they can do for you.