This article will help you understand the elementary matter of getting into the game with a reputed and established broker. This page contains all the tools you need to make it as a successful trader.
So let’s get right into it.
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Choosing A Forex Broker
Forex brokers are numerous all over the world. However, whichever one you choose will be a decisive move indeed in your career as a trader. All of them look promising, but not all of them deliver on their promises. So your best choice lies with a broker that is strictly regulated by the government and has superb reviews from the majority of clients.
Once some fitting candidates are selected, you can get a little nit-picky and scrutinize these details to cipher out the right one for you.
- Service quality: A lot of this depends on whether the broker is licensed and regulated by an authority such as the CFTC and registered with the FCM. Usually you do not have to pry any further than the broker’s official website to find out what’s what?
- Spreads: A spread explains the discrepancy between the buying price of a currency and its selling price. It is calculated in ‘pips’. A spread essentially how the brokers earn money in lieu of receiving a commission. So unless you have a soft spot for your broker at the expense of your own financial returns – unlikely – you should look for a broker with as low a spread as can be found.
- An assortment of tools and information: Each Forex broker has its own trading platform online that customers can access to do their trading. Usually, this platform contains additional information such as charts and other kinds of data in real time and commentaries.
- Options in leverage:Leverage is a huge deal in Forex trading. It comes across as a ratio between the total capital relative to the real capital – the amount lent to you by the broker to trade. With ratios expressed up to 250:1, it exponentially enlarges your winning potential but also your loss if the trade does not work out as you has predicted.
- Types of accounts: Forex Brokers usually afford multiple accounts to their traders. There is the mini account which requires a minimum trade of around $250 to activate at high leverage. The standard account enables you to work different leverages but requires a much higher initial deposit of $2000. Finally, there is the premium account which requires a still higher initial deposit to be activated and comes with more tools and services along with differing leverages.
What To Look For In A Forex Broker
Now that we have covered the essential features to look for in a broker, let us now learn what we hope not to see in a Forex broker.
- Sniping/Hunting: These terms describe dodgy moves made by brokers to make some extra green for themselves. Naturally, no broker has readily admitted to have ever done it but no of them can be totally cleared of suspicion. The only way to pinpoint the issue is by talking to other traders who have been unfortunate enough to experience it.
- Rigid terms on margins: If the funds you are trading with have been lent, your broker has some control over the amount of risk you stake it at. And so, the broker can buy or sell on its own terms and that can be a costly error for you. Again talk to other traders and find filter out potentially crooked brokers.
Hopefully now you have a better understanding of how to go about selecting your broker to give you a good start into the Forex market.