There are many things to be considered when you begin your online forex trading account and that is to consider how to choose a forex currency trading broker.
The question is how do you select the best forex brokers. Consideration should be given to these 7 critical points when you are making the decision to appoint a forex currency trading broker.
This works on multiple levels. You need a broker that you can rely upon to be trustworthy and who will not all of a sudden vanish like a puff of smoke from the internet taking with them all of your hard earned money. Please satisfy yourself that your forex broker is a member of a professional trading association as the fx market is largely unregulated so take care to ensure your broker has impeccable credentials.
The first step is to check up on the reliability of the currency trading broker and to confirm your online forex broker is regulated. In the USA this means that you want a forex trading broker that carries a current registration with the Commodity Futures Trading Commission (CFTC) and also the National Futures Association (NFA).
The National Futures Association should be consulted to make sure that your forex currency trading broker has a good record regarding complaints. Other countries have their own regulatory bodies for example the same function is performed by the Financial Services Authority in the UK.
Another consideration is whether the online forex broker's trading platform is reliable. The forex trading platform is the financial software that will connect you to the FX markets whenever you want to trade. If the online forex trading platform is often offline then this will cause you some major problems. There could be a time when you miss out on an opening price or closing price because of the forex trading platform experiencing some downtime.
Some good advice is to check what others say about the forex broker and go online and check the relevant forex forums on the web and see what experience they have of downtime. Remember it is like with all online forums do not listen to the loudest voice as they may have a vested interest either way in recommending or not recommending who in their opinion are the best forex brokers
2. Services Provided by the Best Forex Brokers
The forex markets trade 24 hours a day from Sunday night to Friday afternoon EST. You will need to check that your forex broker's trading platform is available all of this time, and certainly the best forex brokers are and they will also offer 24 hour customer support on forex trading days.
Check that they cover at least the seven major currencies USD, AUD, CAD, GBP, EUR, CHF, JPY and again the best forex brokers certainly will.
The best forex brokers should offer you financial trading charts, technical analysis charts and instant execution of your forex trade at the price displayed.
3. Forex Broker Costs
Online forex brokers do not make commission charges but will make their income from the forex trading spread. The forex spread is the difference between the buy and sell prices on any currency pair. The forex trading spread can be anything from 1 pip or less and up to about 3 pips although this will depend upon the online forex brokers terms of service and the currency pair being traded.
The piece of the pie taken by the spread can make the difference between achieving a profit or making a loss in your forex trading account over both the immediate and also the longer term so you will need to check closely at what level the spread is calculated. If you can decide which pairs you are likely to trade most often, for example I prefer the USD/GBP trading pair which is known as cable, the spread on those pairs will be more important to you than on others.
Beware of special marketing tricks like special offers of lower forex trading commissions that may not last long once you have committed your funds.
Consideration need to be given on how much is the minimum amount of capital you can invest. The accepted advice given to new forex traders is to start your forex trading with small lots so you will need to consider a forex broker who will let you open an account with less than $250.
4. Margins which are also known as Deposits
Margin requirements vary from forex broker to forex broker. A lower margin requirement means higher leverage, and higher leverage gives you greater profits or losses on the same fund size. So low margins seem great when you are doing well, but losses will be bigger if things go badly.
5. Lot size
Lot size varies from one broker to another. Generally 100,000 units of currency is a standard lot, 10,000 is a mini lot, and 1,000 is a micro lot. Some brokers offer fractional lots which give you more power to set your own lot size. You may consider this to be of an advantage to you or if you prefer a less complicated approach this may well be an unnecessary complication.
There are other considerations including the interest paid on your margin account, rollover charges and other FX trading policies. However, these are the main points that you should be looking out for when choosing the best forex trading broker.
6. Customer Service
This is very important especially when you have just started out using a forex trading platform. Like with all new things there will inevitably be teething troubles and you will want to be able to speak or email someone and get an instant response. The best forex brokers will provide this service.
7. Forex Exit Strategy
There will be a time when you want to realize some of the profits that you have made and be able to withdraw your money quickly and easily. Make sure that you are able to get your money within a couple of days as some online forex brokers insist on a 14 day delay which is totally unnecessary
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