When you decide to participate in Foreign Exchange Market or Forex Market, you will need a Forex Broker to conduct the buying and selling of the currencies you trade. The global forex market is huge with a vast number of great forex brokers from around the world to choose from.When you start trading currencies you will notice a big difference in the way they do business, as opposed to the equity or futures market you might be familiar with. You see, the forex market does not have a clearing house or a commission based business that keeps the equity brokers in business. The Forex brokers make their living with the spread of the currency pair they are trading. Simply put, most brokers have the ability to take your order and buy at the bid, or sell at the ask. You may be saying, what is the big deal about that ? and if that is what you said, you are right. The reason buying at the bid and selling at the ask is such a big deal, is because retail traders only buy at the ask and sell at the bid. This entire concept ensures the Fx Broker make a profit, regardless of the outcome. If your broker is charging you a commission, RUN !
Getting to know the spread on all the currency pairs you trade is a very good idea and looking around for the tightest spread is the first step in finding the right forex broker. Let’s say for instance, you like to trade the EUR/USD pair and one broker has a spread of 3 pips and the other uses a 2 pip spread, the broker with the 2 pip spread has edge already.
You need to know exactly what kind of trading accounts the Fx broker offers. Years ago, you would have to trade a standard 100k size account to participate in Forex Market, but things have changed. Make sure your broker has Mini accounts or Cent accounts to get you familiar with how the market trades without losing substantial money.
Brokers in the Fx Market offer extraordinary leverage to trade. I have seen some leverage amounts at 1:500 or more, and that is enough leverage for any type of trading. You will have to use a strict trading plan to incorporate the proper leverage to allow your trading account to grow and not blow up in a down turn. Be careful with leverage, it is a double edged sword.
The trading platform has also changed dramatically over the last few years and most are great. We especially like the Metatrader platform to route all our automated expert advisor trades. Most important aspect of your trading platform needs to be the speed of trade execution, especially if you day trading currencies.
Make sure your Fx Broker has good customer service before you sign up with them. I always send a few emails to see how long it takes to respond and the quality of the answers. Make sure your Forex Broker is registered in the country they are doing business in. I always want to make sure the broker has been in business for at least one full year. FxTradeRebate.Com
