How to Choose a Forex Broker
With so many different
choices out there, how does a Forex "newbie" pick a broker? Chances are
most new traders have no idea on where to start - and that's okay!
We're here to help! We have put together a simple three step process
to help you find a broker that YOU think will best suit YOUR needs.
You might be thinking now, "Three steps? That's it?" Yesssiirrrr!
the first step, you will go through some of the main questions you need
ask yourself when reviewing different brokers. Then you will take a
look at different brokers and their available features. We have put
together a comparison guide by taking some of the most frequently asked
questions across the internet, and surveyed some of the most frequently
asked about brokers out there, so that you don't have to.
this guide, you can narrow your choices down and take the final step of
talking with different brokers and demo trading on different platforms.
Simple, right? Let's begin...
Step 1: Do your research
comparing brokers, do you know what to look for? No? Well, here are a
few of the main questions you should ask yourself:
this broker registered with any regulating authorities? Check to see if
your broker of choice is registered with the National Futures
Association (NFA) or Commodity Futures Trading Commission (CFTC) if
they're based in the US. If the broker is based in the United Kingdom,
check with the Financial Service Authority (FSA). If the broker isn't
registered with any of these or any other recognized regulating firm,
then you may want to think twice before signing up with them.
Desk or Non-Dealing Desk broker? Does the broker offer fixed or
non-fixed spreads? How wide are the spreads? These questions are more
significant to those traders who like to take quick profits on a few
pips. Large and/or variable spreads can cut into the profits of this
type of trading strategy.
- How much or how little leverage will a broker give you? We highly recommend you review "Leverage the Killer"before
deciding on how much leverage would be suitable for your trading style.
The phrase, "Less is More," can save every newbie
course, you’re not going to start trading with real money right away,
right? Well, when you do having a winning strategy and you are ready to
trade live; knowing how much risk capital you have to start with makes
a big difference. If you have $2000 or less to start with then you
probably want to start trading "micro" lots. Not every broker has this
- Does this broker credit or debit daily
rollover interest? Some brokers either do both, deduct interest, or
neither. This information is important to traders who hold positions
- Does this broker over premium services such
as charting, news feeds, and market commentary? How important are
premium services to my trading?
Step 2: Compare brokers
Let's not beat around the bush, now you need go to Broker Comparison Guide.
Step 3: Open demo accounts and ask questions.
at least two brokers that fits most of your criteria and open up demo
accounts. Trade in different market environments. Learn all the
different features of each trading platform. If you have questions,
don't be afraid to ask. Many brokers have excellent customer service
support and would be happy to answer your questions.
demo trading platforms are very similar to their live counterparts, but
not exactly the same. There may be a difference in speed of execution,
slippage, and platform reliability (most of the time live accounts are
more reliable than demo accounts). When you do have your strategy down
and you are ready to move to a live account, start off small, test the
waters, and see if this particular broker will suit your trading needs.