Once the decision is made to start trading foreign exchange, the next step is to select a broker. So what does a broker do? Basically, a forex broker buys and sells orders on the traders behalf. Although many tout themselves as offering “commission free trades,” brokers earn money by charging a commission or a fee for their services – it’s just called “the spread,” in foreign exchange trading.
Choosing the best foreign exchange broker for your needs will mean some research on your part, but its is worth taking a little time choosing - you really need to decide a, whether the broker you choose is honest, b, the fees you will be charged and c, which broker is likely to suit your trading style and philosophy. Are you a smash and grab merchant or in for the long haul?
The Forex market is an “unregulated” market, which is unlikely to change in the near future. But there are agencies where brokers can register themselves and certain government bodies in the USA are making an effort to educate the public about foreign exchange trading. In the United States a broker can register as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) and join the NFA. The CFTC and NFA were created in order to protect the public against fraud, scams and abusive trade practices.
Choosing the best foreign exchange broker for your needs will mean some research on your part, but its is worth taking a little time choosing - you really need to decide a, whether the broker you choose is honest, b, the fees you will be charged and c, which broker is likely to suit your trading style and philosophy. Are you a smash and grab merchant or in for the long haul?
The Forex market is an “unregulated” market, which is unlikely to change in the near future. But there are agencies where brokers can register themselves and certain government bodies in the USA are making an effort to educate the public about foreign exchange trading. In the United States a broker can register as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) and join the NFA. The CFTC and NFA were created in order to protect the public against fraud, scams and abusive trade practices.
Things to consider when choosing a foreign exchange broker
- The broker is not your friend – he’s not necessarily your enemy, but it makes no difference to him how much money you make or lose, only how many trades you make and extended positions you keep open. Win, lose or draw, the broker gets paid.
- Do they have 24 hour customer support? The FX market is a 24 hours a day market – your broker needs to be too.
- How good is their customer service? Try them out before deciding, but bear in mind, their sales service may well be better than their after sales service. If possible, get a personal recommendation. By personal, I mean from someone you know personally - not the nice gentleman who posts the YouTube videos that demonstrate how easy it is to make a fortune forex trading.
- How comfortable are you with their trading platform? Many brokers offer a demo account facility that will allow you to test their platform. This is a crucial point – you must feel that you fully understand their operating software and are comfortable using it. Bear in mind using a demo account with no money in is not the same as trading for real. Which trading platform you prefer will depend on a number of factors.
- What level of commission do they charge? i.e how much is their spread?
No comments:
Post a Comment