The longer we live, the more we realise that we depend on more than just our intelligence. We can only get so far by being smart, but if we don't use the systems that are set up to help us, we're likely to fail. The Forex market is the same way. Because of the way the market works, we have to go through a broker or a market maker to start and finish trades. There are Forex brokers in every part of the world, just like there are places to trade currencies in almost every part of the world. But there are a few things you should think about when looking for the right broker to help you with your trades.
- Check out the different kinds of spreads they have. The spread is the difference between the bid and ask prices for the currencies you trade. Brokers don't get a cut of what you buy or sell; instead, they take the difference between the prices as payment. Your broker may also offer fixed or variable spreads, which can be different for large accounts and miniaccounts.
- What kind of business does the broker run? Some brokers make the market, while others are ECN brokers and give many traders access to their dealing desks.
- Margin requirements. How much of a margin do they need? That is, how much of your trade's investment do they expect you to pay to start a trade? You also need to know what their margin calls are and how long you have to answer them.
- Does the broker have a licence? This means that if you sign up to use their services, you will be protected and insured against any fraud that happens within their company. Also, your money won't be mixed up with the broker's business money.
- How do they handle rollovers? Do they have any minimum margin requirements for overnight positions that they can use to earn interest? Also, do they have any other rules or requirements about how you can earn interest on rollovers?
- Requirements. The most important thing is probably to make sure that the Forex broker you use has the right credentials. So, choose a broker who is a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) (FCM). This means that you are protected by the law from any unfair business practises or scams that may come up.
- Slippage. Can they tell you what slippage they expect to happen in normal markets and in markets that move quickly?
After you've done your research and chosen one or more Forex brokers, it's time to set up your trading account. You can start trading when your funds are clear. Don't forget to read
Read the trading instructions carefully to find out how the broker can help you manage your trades. You could lose money on your first trade if you miss some important details. So before you make your first trade, take the time to read the details and ask the brokers or their support staff any questions you may have.
