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How to choose your Forex broker?

Dated: 2016-12-10

There are many things we are dependent on throughout your life. Unless we get accustomed to the different systems, our smartness is of no use. The method on the basis of which the market operates also decides how our trade starts and completes. There are many Forex brokers all over the globe just as we find currencies being traded all over the globe. Certain tips which you need to consider while hunting for the right broker are:

Forex broker

Qualifications: This is very important in this line of business. It is very important that your broker is a registered one with the CFTC as a FCM (Futures Commission Merchant). This makes sure that you do not get into traps. This also gives your protection against any wrong trading practices or scams.

Ensure that the broker you are signing up with is trustworthy member of the CFTC so that your funds are not mixed up with the broker’s funds and in case you have a problem, you could always appeal to someone.

The operating model your broker uses. There are 2 types of brokers viz, ECNM brokers and market makers.

Each broker has a different spread to offer. What exactly is the spread? The spread is the difference in the bid prices and ask prices of the currencies traded in. The brokers earn their money by way of spread. Brokers also offer 2 types of spreads that is the variable spread and the fixed spread. The spreads also vary with regards to mini and large accounts.

Slippage – The broker should be able to decide on the slippage. They should know what to expect from the markets.

Margin requirements – The broker has to decide on the margin requirement. This implies the percentage you are ready to shell for opening the trade. It is very important you also clarify on the margin calls and the period required for responding to the calls.

Rollover policy of the broker- The broker needs to maintain minimum margin requirements. The broker can use this interest amount for overnight position. In addition, whether they also pay you interest on the rollovers. It is of essence that you understand this nitty-gritty so that you are not in a surprise at any given point of time.

Once you are completely clear and understood what you need from your broker and what the broker needs from you, the next step is to open a trading account. When the funds are transferred, you are now in a position to start trading. Please remember to go through the entire pamphlet of the trading instructions. The instructions would be very helpful and would give you an in-depth on how the broker would be able to guide you while you are trading.