Exchange - Choosing Broker

Getting Started with Exchange - Choosing Broker


You've decided you are ready to start investing in Forex market. You will have developed an appropriate mind set and even decide on the type of account that will meet your needs. So what is the next step? You need a broker, your broker is a person who will handle the actual transactions you want to do when you trade.

Just a few minutes of Internet research will show that there are a huge number of Forex brokers out there looking for your business. Everything from large financial institutions, concentrating mainly on large water bills for small private companies that paid to private investors working with mini-accounts. So how can you possibly know which broker is right for you? Which of the hundreds of available brokers will be the best one to help you realize your investment goals.

The first thing to do is to consider the type of account you are wanting to open and narrow your list of brokers who handle these accounts. Most people reading this will probably be looking at a mini or standard account. A managed account is a whole different breed of animal than investor directed accounts.

If you are interested in a managed account, then the bet is to go with a large financial institution that has proven successful investment strategies. Any brokerage that handles these types of account to be able to provide you with historical data record of their trade to be able to judge their competence and success rate. Always remember that although the current results may be indicative of future results, but they are not a guarantee.

When looking for a broker to open an investor directed account There are many factors to consider. The most important criteria although the safety and reliability. Although fraudulent brokers are far rarer than they were several years ago are still some out there. All brokers should have a relationship with a reputable financial institution and should be listed with the Commodity Future Trading Commission as a future commission merchant.

Once you are sure you are looking for then the only legitimate brokers fees and commissions would be a good factor to consider another. Most currency traders do not charge any costs to make their profits from spreading. The spread should be clearly stated on their website, and should also tell you whether the spread is fixed or can vary in certain circumstances. Check if the spread is the same for all types of accounts, some brokers charge higher spreads for mini accounts.

Something else to consider is trading software provided by the broker, most brokers will allow you to check out a demo account so you can test their software. Make sure the software works well and is easy to use. It is very difficult to trade if you have problems using the broker-Supplied.

Does the broker provide instant executions and that their destruction policies? The decay can be expected in normal commercial circumstances. Look at their policy and margin requirements. Are there different margin requirements based on the currency traded? Make sure they cover all currencies will be interested in trading.

Choosing the right broker is vital. Time spent fully research your options before you make a choice will definitely be time well spent.