FX Trading Considerations
An account with a forex currency trading broker is something that you should have when you’re beginning forex trading. You always have to have a way into the market and your forex brokers will give you software so that you can take control of your trades online. Your forex brokers also provide you with leverage so that you can trade on margins and control bigger sums than you have yourself.
There are many points to take into consideration when selecting forex brokers. Listed below are some of the most basic points to consider.
1. Reliability
Locating forex brokers that you can trust isn’t as straightforward as you may think. The foreign exchange market operates globally and there’s no global regulatory body, so some brokers are unregulated. Check where their business is based and what sign ups and subscriptions they have. American brokers must be registered with the Commodity Futures Trading Commission (CTFC) and/or the National Futures Association (NFA). Other countries have other associations.
You can usually see if a broker has a serious problem by checking forex forums for user feedback. However, make sure to get several views. Don’t accept one person’s viewpoint as fact. That individual may have personal or financial reasons behind praising or criticizing a broker.
2. Services provided
The forex is a round the clock market, 5 days a week. You’ll want your forex brokers trading software to be live online all of this time. You may also need to see if they’ve 24 hour customer care Monday through Friday.
Make sure that they cover all the major currency pairs, that’s USD against EUR, JPY, GBP, CHF, CAD, and AUD. They should also offer a minimum of some cross pairs of the major currencies, that’s two of the other currencies excluding the US dollar.
All forex brokers will offer you charts and technical analysis. Make certain these suit your needs. Additionally, you will want to check whether or not they offer instant execution of orders at the displayed price without slippage.
3. Charges
Forex currency trading brokers usually don’t impose a fee or commission. Instead they make money from the spread, which is difference between the bids and ask prices of the currency pair. Spread is normally within the array of 1-3 pips, based on the broker and the currency pair, however it can differ at times of volatility.
The size of the spread can create a huge difference to whether you make profits in the long run. If you know which pairs you’ll probably trade quite often, the spread on those pairs will be more important to you than the others.
4. Minimum account and lot size
The minimum investment will probably be key point. Some forex brokers only offer standard accounts in which the minimum investment could possibly be $10,000 or even more. Mini forex trading accounts have a lower minimum account balance, often$250-$1,000. These are better for most beginners.
5. Leverage
Leverage is the thing that determines how much you can control using the money that is in your account. You can often control a lot that is up to 100 times the money that you actually put in, with your broker covering the rest. Some brokers offer even higher leverage but remember that the larger the leverage, the greater you are risking on each trade.
You can also look at a prospective forex brokers rollover percentages and other policies. However, the above mentioned 5 points are the main elements to consider when choosing a forex currency trading broker.
Selecting Forex Brokers
