Finding the Best Forex Broker
Finding the best forex broker for your needs
takes some research. Hundreds of online brokerage firms now compete for
your account, so plenty exist to choose from. Check out our recommended
top list above : http://www.topforexbrokerscomparison.com
Finding the best forex broker that has a fast
execution capability, a reliable trading platform and which can be
trusted with your account deposit might be the first things you will
want to assure yourself of. Other sweeteners can include account opening
bonuses and other features like mobile trading and SMS market alerts.
Basically, you want a forex broker you can trust
to handle your money and your trades so that you can get on with the
business of trading forex without worries. Anyway, to make the process
of finding a broker simpler, the list above covers most of the key
comparison points between forex brokers so that you can be better
prepared for a successful search.
But first we will go through some of the criteria
and features you should look for when searching for the best forex
broker for you.
Regulation
Most reputable online forex brokers take the step
of submitting to regulation by one of the main financial regulatory
agencies operating in their home country. Sometimes, they will even be
regulated by more than one agency. Such regulation provides you with the
security of knowing the broker's operations are being overseen by an
independent authority with the goal of keeping the business honest.
Data Security
When you either enter or store vital personal
information online, it can be subject to falling into unfriendly hands
that may use it for their own personal gain. Accordingly, a top priority
when choosing a broker is that they encrypt all data entered into
online forms using industry standard SSL-encryption or better.
Another key issue involves the safe storage of
data so that it will not be lost in case of disaster. Many online forex
brokers use duplicate data farms with high security to assure the safety
of your account information.
Dealing Spreads
Many day trading strategies become unsuccessful
over the long term if your account does not have access to competitive
dealing spreads. The spread is simply the difference between the bid
price and the offer price for a particular currency pair and should be
no greater than five pips in the majors and major crosses, with wider
spreads often seen in the minor crosses and exotic currencies.
Commissions and Fees
Sometimes brokers are not content just to have
you dealing on their spreads. In this case, they might charge a
commission or fee for each transaction. Sometimes these are calculated
on a per transaction basis or on a volume dealt basis. Additional fees
might be involves in making withdrawals or deposits, so be sure to check
that information to minimize your transaction costs.
Order Types
Most forex brokers handle the basic market, stop
and limit order types. Nevertheless, some brokers also offer support for
OCO (one-cancels-the-other) and trailing stops. If either of these more
specialized order types would be suitable for your trading plan, then
be sure that your chosen broker supports them and make sure that you
fully understand the limitiation of these different order types.
Currency Pairs
Since more currency pairs often means more
opportunities to profit, you will want to make sure that your forex
brokers offers all of the pairs you might be interested in trading. Some
traders also like to have access to precious metals like Gold and
Silver, in addition to oil, especially if they will be trading the
commodity currencies like AUD and CAD whose exchange rates can depend on
commodity price fluctuations.
Deposit Required
Unless you are just interested in opening up a
demo or practice account with the forex broker, they will usually
require a minimum deposit to be made for you to get started trading
forex. Often, the more money you place on deposit, the more features you
have access to or the tighter your dealing spreads become. Make sure
that you research the broker thoroughly before sending a deposit.
Account Types
Account types vary considerably between brokers,
but most offer demo accounts for practice trading, mini accounts for
newer traders with a low minimum initial deposit, standard accounts for
more experienced traders with a moderate deposit, and finally VIP
accounts for larger initial deposits.
Also, the features offered with each account type
vary quite a bit among the various forex brokers, so be sure to see
which reputable broker will offer you the best deal for the initial
deposit you have available to you.
Leverage
Leverage refers to how much of a position you can
control with a certain amount of funds allocated to it. Forex brokers
currently offer leverage rates of as high as 500 to 1. What this means
is that you can control a $50,000 trading position with just $100
allocated from your portfolio. Note that in the U.S. the maximum
leverage is 50:1 for majors and 20:1 for minors.
Naturally, amplifying your risk by using leverage
can result in larger gains, as well as larger losses, so be sure to use
leverage wisely and avoid trading beyond your means.
Margin Requirements
Even though forex transactions are exchanges and
not purchases of an asset like a stock or commodity, when the exchange
rate moves, it creates credit risk for the counterparty showing a gain
on the transaction. As a result, most forex brokers require that their
clients place a certain amount of funds on deposit to cover such
potential losses. This is known as the broker's margin requirement.
Since margin requirements vary among brokers, you
will want to make sure that the broker you choose has guidelines you
can live with. Also, some brokers automatically close out trading
positions when the amount of margin in your account is exceeded by
trading losses, or according to other criteria, so be sure to understand
such the implications of such policies for your trading business.
Trading Platforms
Most of the better forex brokers offer their own
proprietary trading platforms for you to use to execute forex
transactions with and to keep track of the market. These usually either
take the form of web-based platforms that use access via your Internet
browser or client-side platforms that you download to, install and run
on your personal computer.
In addition, some brokers support independent
trading platforms like the popular MetaTrader 4 platform that can be
obtained free of charge and which many commercial forex trading robots
are designed for.
Mobile Trading
Some forex traders require the convenience of
trading and keeping in touch with the forex market via their mobile
phone or other mobile device. Many brokers provide such services, so if
this is important to you, check out what each broker offers in this
regard and whether their software will work with your device.
Algorithmic Trading
Forex traders increasingly wish to automate their
trading plans or algorithms to free up their time for other endeavors.
They often do this by using a programming language to write down their
decision process in an algorithmic format that can then automatically be
executed by forex trading platforms that support this capability.
If you think you might want to automate your
trading plan, check to see with brokers you are considering to see if
they support this type of trading and how they do so.
Market Alerts
Many brokers offers SMS or other types of market
alerts to their customers. If you think this might be important to your
trading business, look for this feature.
Support
Those new to forex trading will want to have
better access to both dealing support and technical support. See what
services each broker under consideration provides and whether it will
suffice for your purposes.
Information Resources
Newer traders often require educational materials
about the forex market and trading in general to get started trading
forex on the right foot. If this is important to you, research what the
brokers you are considering have to offer in this regard.
Also, many brokers provide sophisticated news
feeds, like Reuters for example, as well as proprietary market
commentary and other timely information.
Dealing Desk Access
Some traders like to speak to a personal dealer
or advisor at the broker in order to obtain inside market information
and advice. Others like to be able to make transactions over the
telephone in a pinch. If either of these options makes sense for you,
inquire with your potential brokers whether dealing desk access will be
available to someone with your anticipated initial deposit.
Choose the Top Forex Brokers Right Now!
