Most traders will see it necessary to make use of a broker while they make any transaction in the forex exchange. A broker by definition is someone who does the actual purchase and sale of orders on behalf of the traders. The broker can be an individual or a company. The broker usually offers advice to their clients but they only work on orders given by their clients. They are paid either through fees or through commissions.
Forex brokers must associate themselves with large financial institutions for them to get access to the necessary finds so as to get margin trades. In case you are looking for a forex broker in the U.S. you must make sure that the broker is registered by the Commodity Futures Trading Commission as a Futures Commission Merchant. This is aimed at protecting you as a trader from trade practices that are abusive and fraud.
For you to start participating in the forex market as a trader, you will have to open an account with a broker. There are very many brokers that are available. You need to do a great research for you to be able to pick the right broker. It will help you understand brokers, the services they provide and the fees or commission structures they have.
Just like in any other thing, there is no better way that you could know a broker better other than talking to the people who already know and have interacted with the broker. It is advisable to talk to people who have experience in the forex market and have actually interacted with brokers. Go ahead and ask them about the brokers and if they have had any problems with their brokers.
In case you settle for an online broker, you can test how good they are by contacting their help desk and see how they will respond to your questions and how quick they do so. The kind of help you get before deciding to sign up with a forex online broker is of much importance. This is what helps you make a decision to learn forex, work with that broker or not.
Customer satisfaction as well as safety is of chief importance. This is the same with a few factors that ought to be put into consideration. How fast and the level of slippage that a broker will execute a trade is of great importance to you. A broker who is online should give an automatic execution and be in a position to describe his or her slippage policy. They should also be in a position to provide you with comprehensive information regarding how much slippage you can get from them in the normal as well as the fast moving markets.
Your costs are another vital factor. The broker’s spread and whether it is fixed or can vary is of great importance to note. Check whether the broker offers the same or a higher spread for a mini account. Check whether the broker has hidden costs or any other fees. Finally, have in mind that the cheapest brokers are not necessarily the best.
Anyone trading in a forex market definitely needs a margin account. It is therefore important that you get the margin accounts of your broker and understand them fully before you open your account. Get to know the margin requirements, the variations depending on the currency6 involved, the day or the type of account. Brokers have different policies regarding the margins for the mini accounts.
In order to be successful in forex trading, you need good trading software and are good at using it. Many brokers will offer free accounts to practice. These accounts just function like real accounts and they use the same software. It is good that you sign up for different software and test them properly for reliability and speed more so when the market moves fast.
Other important things to look for include the minimum balance requirements, what currencies can be traded and interests on balances. Ask about lot sizes and irregular lots. Also check whether client accounts are insured and the level of insurance.