People are increasingly beginning to see trading as both an investment option and a way to earn a living. Forex Trading or Currency Trading has quickly become one of the most prominent forms of investment trading.
Forex trading is simple because you don’t need to have much capital to get in on the market. Unless your bank is a large financial institution, you will need a broker. As FX Trading demand has grown, so has the number of Forex brokers.
There are many Forex brokers that you can choose from. Forex traders are not stuck with how to trade. The issue is how to find a trustworthy broker so that they can help you start trading, click here for more info!
All brokers are not created equal. Find a broker who meets your trader needs.
This could prove tricky, as brokers may not offer the exact same services or have different policies and charges. Your profits can be greatly affected by other fees and the pip spread.
Forex traders must be able and able to focus on the markets in order to make a living. Before you trade, it is important to choose a reliable Forex currency trading broker.
There are many factors that make a forex broker great. Here are my top ten tips on how to find good currency trading broker.
1. Reputation
As there are many businesses that “fly-by-night” in the industry, it is important to maintain a good reputation. Forex currency trading brokers who have a track-record are best.
Remember that they must prove every transaction. Does the office have a valid license and are there satisfied customers?
Brokers sharing their experiences on review sites can provide valuable insight. Anyone who has been ripped-off in the past should be avoided.
Reliable brokers should be open about their business and transactions. Information about how they work must be made available online so that potential traders can learn more about them and their reputation.
2. Regulations
No matter your location, you must always choose a Forex broker whose activities will be closely monitored by regulatory agencies. A reliable Forex broker must be registered with the appropriate authorities and held responsible for their actions.
Swiss banks are some of the most well-regulated around the globe. They are managed by the Swiss Federal Department Of Finance. US Forex brokers need to be registered with Commodity Futures Trading Commission. They are Futures Commission Merchants (FCM), and official members in good standing of NFA.
This means they must follow all regulations and industry rules. It is not a good idea to have an unregulated broker keep your money somewhere, even if it’s nowhere. They may fail and you might never see your money again.
You may choose to work with a different broker if the broker has not been supervised or regulated by a financial authority.
3. Pip Spread: Differences
Forex trading brokers are not subject to commissions and fees as stock brokers. They earn their commissions from the difference between each currency pair’s pip spread.
Contrary other financial markets, currency trades are not conducted through a central market. Spreads’ value is determined by the broker that you use.
Forex brokers typically publish prices online, either live or delayed. This allows traders to compare spreads and provides a variable spread.
Because of the volatility in Forex Market, a variable spread can seem attractive. The spread can be small in quiet markets but it can quickly increase and wipe you out of your profits.
Many brokers are considered “bucket shop” by many. They may not be in your best interests and can even alter spreads to their advantage.
It is important to keep looking for FX brokers offering fixed and low pip spreads.
4. Execution speed
This is something that novice traders don’t notice when signing up to trade accounts.
Brokers often display live prices on the trading platform. But the real question is how quickly they can execute an order once it has been clicked.
It is crucial that the order be completed quickly, particularly if the scalper trades 5-minute charts.
It is best to open a demo account with the broker to resolve this issue. This will allow you to test their trading platform’s execution speeds.
5. Minimum Trading Account Size
Broker leverages were created to cater to the needs of retail traders with small capital who wish to participate in the Forex markets.
Brokers often offer Micro or Nano accounts.
The key difference between Standard and Mini accounts is the following. Standard accounts trade with 100,000 units. Mini accounts trade in 10 times that amount, or 10,000 units per lot.
This means that the account’s size is only tenth that of the regular one. You can take a tenth more risk with the mini account that you would with the regular one.