FOREX Brokers
Before beginning your career at
FOREX trading, you will need to set up an account with a good FOREX
broker.
If
you are looking for the information on the following:
Most
FOREX traders use a
broker to handle their transactions. What exactly is a
broker? Strictly speaking, a broker is an individual or a
company that buys and sells orders according the investor's
decisions. Brokers earn money by charging a commission or a
fee for their services.
A FOREX
broker needs to
be associated with a large financial institution such as a bank in
order to provide the funds necessary for margin trading. In
the United States a broker should be registered as a Futures Commission
Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as
protection against fraud and abusive trade practices.
Before
trading FOREX you
need to set up an account with a FOREX broker.
You may feel overwhelmed by the number of brokers who offer their
services online. Deciding on a broker requires a little bit
of research on your part, but the time spent will give you insight into
the services that are available and fees charged by various brokers.
The
best advertising is
word-of-mouth advertising, and this is just as valid in FOREX trading
as it is for any other type of business. Talk to friends and
associates to see who they are dealing with and find if they have any
complaints or difficulties in dealing with a particular broker.
You
could try selecting a
few online brokers and contact their Internet help desks to see how
quickly they respond to enquiries and whether or not they answer
questions to your satisfaction. Keep in mind, however, that
pre-sales service may be better than after sales service.
This can be true for any online business, not just FOREX brokers.
Customer
satisfaction and
safety are just part of the story. You want to find a broker
who executes orders quickly and with minimum slippage. All
online brokers should offer automatic execution and have clear policies
regarding slippage. They should be able to tell you how much
slippage can be expected in both normal and fast-moving markets.
Next
you want to know the
fees involved. What is the spread? Is spread fixed
or variable according to the type of account? Are mini
accounts subject to wider spreads? Are there any other
charges? Smaller spreads mean more profit for the trader, but
there may be a trade-off between spread and service. Look at
the overall picture before deciding to go with a particular broker.
Margin
accounts are the lifeblood of FOREX trading, so be sure you understand
the broker's margin terms before setting up an account. You
need to know the margin requirements and how margin is
calculated. Does margin change according to the currency
traded? Is it the same every day of the week? Some
brokers may offer different margins for mini and standard accounts.
Trading
software is very
important for the online FOREX trader. Get a feel for the
options that are available by trying out a demo account at a few online
brokers. Above all, you are looking for reliability and the
ability to perform well in fast-moving markets. The software
should offer automatic trading and may have special features such as
trailing stops and trading from the chart. Some features may
only be available at an extra cost, so be sure you understand what your
trading needs are and how much the broker charges to provide them.
Other
information to find
out about includes the broker's policy regarding minimum account
balances, interest payments on account balances, which currencies can
be traded and whether or not non-standard sized lots can be
traded. You should also find out whether clients' funds are
insured and the extent of that insurance.
Forex
Trading
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