by Many people are now considering trading as an investment method and business option. Forex Trading, also known as Currency Trading, is one of the most well-known types of investment trading.
Forex traders will find it easier to enter the market as there is no minimum investment capital. You must have a broker to trade currencies, even if you’re not a bank. The number of Forex brokers has increased due to the increase in FX Trading’s popularity. Forex traders have many options. The challenge is not to choose a broker, but to find a reliable one – read more.
There are not all brokers available on the market that will suit your needs. Find a broker who can meet your trader needs.
My experience shows that this is the issue. Different brokers may offer different services. You will lose profits if you pay small variations in fees like the spread.
Forex traders must remain focused on the markets in order to make a decent living. A reliable broker is essential before you start trading forex currency.
Many factors can make a foreign forex broker a wise choice. Here are my top ten tips for selecting a currency trading brokerage.
1. Reputation
There are so many “flying by night” companies on this market that it is vital to build a reputation. Forex currency traders who have more experience and better track records are the best.
It is important to verify that the business transactions of the office are genuine. Are satisfied customers and the office legitimate? Is it possible they have been in business for some time or are just starting to?
Review websites that provide honest feedback on brokers’ experiences can be a great resource. Avoid anyone who has been ripped off previously.
Reliable brokers must be transparent. Online information must be readily available about the work of brokers to enable potential traders to get more information about their reputations, performance, and other details.
2. Regulations
No matter where you are located, it is important that you choose a Forex brokerage which conducts business in a country that has a regulator. Reliable Forex brokers must be regulated and held responsible to relevant authorities.
Swiss banking is an example of one of the most tightly controlled ships in the world. It is regulated in Switzerland by the Federal Department Of Finance. US Forex traders should be members of National Futures Association and registered as Futures Commission Merchants at the Commodity Futures Trading Commissions.
A broker must adhere to the industry standards and regulations. It is not a good idea if an unregulated broker holds onto your cash in the middle of nowhere. Good luck getting your money back if the broker goes bankrupt.
Switching to another broker might be an option if the broker hasn’t been regulated.
3. Variations on the Pip Spread
Forex brokers are not the same as stock brokers. Instead, they charge a commission based upon the pip spread difference for each currency pair they trade.
Contrary other financial markets, currency market trades through a central stock market. Your broker will determine the spread’s value.
Forex brokers can post delayed and live prices on their websites. This allows traders who are comparing spreads to view the spread differences. Some brokers offer variable Pip spreads.
The Forex Market’s volatility makes variable spreads attractive. The spread isn’t enough to ruin your profits, even though it is very small during quiet periods. Spreads may increase when the Forex Market gets hot.
Many brokers are sometimes referred to as “bucket store” because they are not in your best interest. They can also alter spreads to their advantage.
Bottom line, you should continue to look for FX brokers that have fixed or low-pip spreads regardless of the market.
4. Execution speed
This is a fact most traders do not realize when they open a trading trading account.
Many brokers allow you to see live prices on their trading platform. However, the question is: How quickly can they execute an order after you click “Buy/Sell”?
It is important that you execute your order quickly, especially if your scalper trades using the 5 minute charts.
You can resolve this problem by opening a demo trading account with the broker and giving them a try. A demo account is a way to test their trading platform’s execution speed.
5. Minimum Trading Account Size
Broker leverages have been growing in popularity to aid small retail traders who do not have sufficient capital but still want to participate in the Forex market.
There are Micro- and Nano accounts. However, most brokers only offer Standard and Mini accounts.
A Mini Account and a Standard Account are different in that they trade 100,000 units while a Mini Account trades 10% or 10,000 units/lot.
Mini accounts can be tenths the size of regular accounts. This gives you ten-fold the risk of regular accounts.