We are trying our best to find the best forex brokers.But how to choose the top forex brokers?Is there a standard for us to choose the forex broker?
Yes.There is.
If you possess the drive, focus, and perseverance necessary for
concluding any activity successfully, forex is your ground. Armed with
the necessary knowledge, and almost immune to the tricks and lies of
fraudsters through the information that we provide in this website, you
are ready to step to the next phase of your trading activity. After
acquiring the background information, the first step of trading forex
must be the opening of an account with an
online broker.
There are a large number of
forex brokers in the retail forex market
these days, each touting its services as the best in the entire market.
It can be a daunting task to sort out between them seeking those that
are best suited to your needs, however, as usual; we have worked to
simplify your task by reviewing some of the most reliable brokers in the
market.
You can find those in the
forex broker section
of this website. Here we would like to explain the importance of the
various criteria according to which you can screen the brokers we have
reviewed, and make your choices. Due to the vast diversity of options,
it is not possible to speak of a broker who is perfect for all kinds of
traders. Instead, you should carefully consider your own expectations
from trading, and compare that with what is offered by the broker, and
choose the one that is best suited to your needs.
Here we’ll examine the criteria in order of importance.
What is the point of opening a forex account if the funds we deposit
will be unsafe with the broker, or worse yet, will be stolen and
misappropriated? What is the logic of studying analysis and currency
fundamentals if the profits that we make are pilfered by shameless
crooks, or squandered by irresponsible individuals who cannot even
manage themselves decently?
Thus, the first necessity for the right broker must be the safe and
reliable track record of the firm. On the other hand, it is clear that
the retail trader possesses neither the tools, the time, nor the
expertise for determining which of the brokers are reliable, and which
are not. Fortunately, the regulatory authorities in this country and in
other financial centers of the world do their best for screening and
weeding out the unreliable ones among the many decent firms. Our best
course is to ensure that the broker we choose is a member of NFA, and is
registered with CFTC in the US, and with other relevant authorities in
other parts of the world.
And last but not least, to make the task even easier for you, we have
reviewed some of what we believe to be the best and most reliable firms
in the market. All that you need to do is to go and check out the
relevant section.
Unavoidably, the second most important variable in our equation for
comparing brokers is the initial deposit requirement. Many traders
prefer to begin their careers by risking very small amounts which leads
them to seek the broker offering the lowest initial deposit requirement
naturally. This reasoning certainly has its merits; however, the initial
deposit requirement should in fact be one of the last considerations in
choosing the best broker for you, unless you really have a very small
amount of capital that you want to risk for forex trading.
A serious
broker offering excellent services may choose to keep the
initial deposit requirement relatively high (around $500, for example)
in order to ensure that the clients are serious about their trading
practices. In addition, forex is usually so volatile that a less than
optimally capitalized account is highly likely to be wiped out during
the ordinary fluctuations in the market. We have already discussed the
difficulties associated with undercapitalization, and those who have
read that article should have little trouble in understanding the
reasons behind our deemphasizing the importance of initial deposit
requirements.
It is self-evident that a beginning trader should only risk the
amount that he can comfortably afford to lose. In that sense, the
initial deposit requirement of the broker should never be more than what
we can afford. On the other hand, beginning our career with a pittance
like $10-50, and trading at 10:1 leverage cannot be considered a wise
choice. Trading with such small sums is similar to trading in a demo
account, and the emotional lessons gained will probably be of little
value.
Spreads are extremely important for forex traders, seasoned, or
novice. Since the broker usually receives the compensation for its
services by widening the bid-ask spread beyond the quoted values in the
wholesale interbank market, a wide bid-ask spread represents a larger
amount of money leaving your pockets, and entering those of the
broker’s. You pay this fee regardless of the profit or loss you make
with your trade: so there’s always good sense in ensuring that you
choose the broker which offers one of the more competitive spreads in
the market. Sometimes it may be advisable to open an account with a
broker that charges slightly higher spreads in exchange for the safety
offered by its long history and track record. But even in that case, a
spread beyond three for the EURUSD pair, for example, is not a very good
idea.
It is not a good idea to trade forex if you cannot withdraw your
earnings with ease. Conversely, the broker must facilitate your
termination of the account in case that you’re not entirely satisfied
with the services offered, regardless of the reasons. This should be
non-negotiable: since the broker is only the custodian of your funds,
there’s no justification for any unreasonable delays or excuses when you
make the request to withdraw your funds.
Similarly, you, as the client, should have no headaches at all when
depositing funds with the broker. Come to think of it: if the broker is
not even capable of ensuring that your deposit process is smooth, how
likely is he to guarantee a painless and satisfactory trading experience
for you?
Margin requirement and leverage ratios are the second most important
aspect that must be considered during the choice of the broker. For the
beginner, the lower the leverage the better. Since higher leverage is
only advisable for traders with a proven track record of profits and
success, the beginner should be uninterested in the maximum leverage
offered by a broker. Instead, since he must be allowed to get used to
leverage on a step-by-step basis, the minimum leverage available is far
more useful as a criterion.
For an experienced trader, evaluating the value of a high leverage
options can be a bit more different. Since, by definition, successful
traders use highly divergent techniques in their trades, there is no
general rule for determining the optimal leverage ratio for a seasoned
trader. However, for traders who plan to hold a position for long term,
10-to-1 may well be the highest sensible value.
In short, beginners should choose brokers that offer the lowest
minimum leverage option, and the greatest customizability. With such a
setup, it is possible to increase leverage gradually, in tandem with our
improving and developing skills.
In online forex trading, almost all activity is conducted through the
trading software. Indeed, for a safe trading experience, this is also a
must: in order to ensure that the broker doesn’t temper with your
trades, and misquote currency prices to you, you should always seek
those offers which allow the greatest automation, and reduce human
interference to the lowest level possible. This is only possible with a
successfully implemented trading platform.
What should you look for when choosing the trading platform? Does it
offer a wide array of charting tools and technical indicators for
evaluating the price action? What about financial news? Is the
interface clean and uncluttered? Since you may spend a long time looking
at the graphics and examining charts, is the appearance of the platform
physically pleasing and relaxing?
Are the servers of the broker reliable? Do you have connection
problems in the middle of something important while using the demo
account? How wide are the spreads during market volatility and news
releases? Is slippage and misquoting a problem? Can you customize the
platform to suit your trading needs and language requirements? Does the
platform receive frequent updates and bug fixes?
These are the most basic issues related to the trading platform.
Needless to say, an advanced, easy-to-use, and uncomplicated trading
platform can make the task of the beginner a lot easier. But even the
seasoned traders will find that using a well-crafted, well-maintained
forex software can greatly reduce the element of stress during trading.
Software is prone to generating errors. This has always been the
case, and will remain so for the foreseeable future. When there are
problems with the trading software, or delays, or issues with deposits
and withdrawals, you will need to seek the aid of the customer service.
A friendly, patient, and helpful customer service can be profit
multiplier if used correctly. In those cases where the customer service
is run by individuals with trading experience and understanding of
economics and analysis, you can even hasten the learning process by
asking questions.
Before opening your account, it is perhaps a good idea to read our
reviews on customer service of various brokers to receive a preliminary
impression of how competent the people are. While we cannot just pick a
broker because its customer service department is professional, success
in this department is certainly a promising sign for overall competence.
Some brokers offer a large number of account packages. Others choose
to offer one package with many customization options. In general, the
number of account packages is not very important, provided that the
broker offers a highly customizable main offer with adjustable leverage
and margin requirements suitable to the needs of clients from different
backgrounds and experience levels.
Currencies Offered
Finally, it is a good idea to choose a broker that offers the widest
array of tradable currencies. In evaluating the currency pairs offered,
you should try to make sure that different currency pairs of different
classifications are available, instead of concentrating on just the
number of the total offers. For example, if a broker offers three pairs
of major economic powers, three pairs of emerging nations with floating
currencies, three of fixed or pegged currencies, and three rare pairs
(like the Saudi Riyal, or the Chinese Yuan), the offer is much better
than that of a firm which offers 12 pairs all of which belong to major,
developed economies.
Such details are especially important for the experienced trader, but
the beginner can focus on the more important, basic aspects of the
broker’s package before worrying about the intricacies of the various
currency pairs on offer.
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