The Lowdown On Choosing Your Forex Broker
What do you need to know?
Well, in order to trade the Forex market, you first need to select a Forex broker to action your trades. This is done automatically, sometimes with only a few clicks of the mouse, which is why it’s important to choose the right Forex broker!
Forex is still a relatively new market and as a result there are many Forex brokers available, each with different levels of service tools and resources.
So bearing that in mind what’s the next step?
Well, it’s good to sit down and work through the questions below, so you know what to expect from your Forex broker. OK – here goes:
Which currencies do you want to trade? Forex brokers will have dozens to choose from but some restrict their selection to the major eight pairs. There is plenty of choice for many good trades with the major pairs!
- Do you want the facility to be able to download your Forex broker’s software on to your own PC? This will restrict you to trading from this PC only. Good if you are based at home, not so good if you’re not.
- Do you want the tightest spreads possible? Is this the most important area for you and your trading? Tight spreads means that you hand over less of your money to the Forex broker in transaction fees. However, it’s worth looking at the overall package on offer.
- How much money do you have to open an account with?
- Do you want to pay extra for a guaranteed stop loss? All accounts come with a stop loss but for an additional pip or two you can guarantee your stop loss price to cover any big volatile times during the trading day.
- What type of Forex trading do you want to use? Accounts like Spreadbetting are restricted in countries like the US. Check the availability of the type of account you want to open.
- What about help and advice, trading tools, strategies, forums and chat lines direct to those who can help? Are the trading desks or help desks open during the times you want to trade?
- Leverage. How much leverage does your selected Forex broker allow on your account? This is important to your risk management as a Forex trader.
All the above points are all very important but I would stress that practising on a demo account before trading your live account with your hard earned money is essential.
Why should I do that – I just want to get ahead and trade for real!
Well, this does three things...
Firstly, signing up to a demo account comes with no obligation – so if you don’t like the platform, you can cancel your account and move on to your second choice. Secondly, you can get to know the platform before trading your live account and develop your trading strategy utilising the Forex broker’s trading tools. Thirdly, with most Forex brokers you can continue to use your demo account, even after opening a live account, so you can go back to it to try out new strategies.
Look for the features you want in a trading platform and from a Forex broker. If you are satisfied with the facilities, tools, trading platform, currency pairs traded, pip spread on the price you buy and sell at and demo account, then you should consider trading with them.
For more information check out this Forex Broker Review page for a review of the best Forex brokers available to you.
To Your Success!
Annabel
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