Choosing a Forex Broker :
If you are thinking about becoming a Forex trader then you will need to work with a broker. There are very many brokers in existence, and it is important to work with the right one – so how do we go about choosing a good one?
We can gauge the quality of the service offered by a particular Forex Broker by examining four different criteria.
Reliability
To know whether a company is reliable or not you need to look at things like the number of years they have been in operation. If they have been around for a long time then it is likely that they have experience and a proven track record. Another good indicator of reliability is to check whether the broker is registered with the appropriate regulatory bodies in their country – in the UK it would be the FSA. If the firm is a member of a body such as the FSA then this indicates that they have to adhere to certain standards and codes of practice.
Spreads and Leverage
Take a look at how low the spreads are. If a broker has a solid and stable foundation, and is well established with the major banks then they will be able to offer much lower spreads. If a broker offers high leverage then you will have to deposit less money with them.
Tools and Resources
A good broker will have a range of research tools and information resources available for their clients. If you can see that the company has clearly invested time and money into what it offers its clients then you can have confidence in them as a serious business entity.
Technical Support
Make sure that there is constant access to help and support available to you. Bearing in mind that the Forex market is traded 24 hours a day, you want to know that if you have a software problem at any time of the day and night you can access the assistance you need.
Once you have established these basics, then it is time to dig a little deeper and ask some more specific questions about the service on offer. Examples of things you might want to know include:
Does any part of the spread go to anyone outside of the firm? Sometimes there is an agreement by the broker to pay introduction fees or affiliate sales agents a percentage of your trading activity.
Will you be subject to trading restrictions around the time of news announcements? This is the case with some firms so make sure you are aware of the policy.
Find out more about the spreads, specifically whether they are different according to the size of the ticket? Also find out whether all clients are offered the same spreads? Does the broker offer any rebates or volume discounts? What are the typical spreads for the various currency pairs?
Something else which is useful to check out is to see whether the firm has a discussion forum for their clients. If they do and the forum postings are open and uncensored this can give you an excellent indication of what it is like to be a client of this broker.
Most brokers offer a demo account facility which will enable you to try out the service without risking your own money. You need to check if it is different to the real account in terms of functionality, available spreads and execution.
If, having checked all of these points, you feel happy with the service being offered, check how much you need to open an account and go ahead! Once you have found a good broker you are well on your way to success in the Forex market
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