7 Tips for Choosing a Forex Broker
The more we live, the more we find many things besides our minds. We will tend to fail, but unless we use the system we have prepared for our convenience. Likewise with the Forex market. The way we work, we have to work through a broker or market maker to start and finish our trade. You can find Forex brokers in every part of the world because you will find currencies that are traded almost in every corner of the world. However, you must shop for the right broker to help you with your trade.
Perhaps the most important thing about the Forex broker you are using is the right qualification. Therefore, select the Registered Commodity Futures Trading Commission (CFTC) as a Futures Commission Trader (FCM). This means you have legal protection against trade practices and fraud that might arise.
2. Is the broker regulated?
This means that when you register to use their services, you will have protection and insurance against any internal fraud. In addition, your funds will remain separate from the broker’s operating funds.
3. What business model does the broker use?
Some brokers are market makers while others are ECN brokers, providing transaction tables for many traders.
4. Look at the type of spread they offer.
Spread is the difference between a bid and ask price for the currency you are trading. Brokers do not make commissions on your trades, instead they receive spreads as compensation. Your broker can also offer fixed or variable spreads, and they can be different for large and mini accounts.
Can they give you slippage details about what they expect to happen during a normal and fast-moving market?
6. Margin requirements.
What are their margin requirements. That is, what do they expect you to pay to open a trade? You also want to know about their margin calls, and the time you need to respond to calls.
7. What is their Rollover Policy?
Do they have the minimum margin requirements they use to gain interest in overnight positions? Plus, they have other terms or conditions about you getting interest on each rollover.
After you research and choose one or more Forex brokers, it is time to set up your trading account. When your funds are clean, you can start trading. Remember to read
Be careful with trade instructions to find out how brokers can help you manage your trade. If you ignore some relevant details, you can lose money on your first trade. So take the time to read the details and ask the broker or their support staff any questions you might have before you open your first trade.