As a Forex trader, your Forex broker is your main connection to the Forex market. Without a broker, you literally can’t trade Forex at all. Choosing the right Forex broker for the job is one of the most important decisions that you must make as a new Forex trader. With so many brokers out there, what do you look for? In this article we are going to look at 5 tips to finding a good broker.
Most brokers use a spread based fee structure where the broker charges an additional few pips (the smallest possible change to the value of a currency pair) to the spread (the difference between Bid (Buy) and Ask (Sell) prices. So, that means that lower spreads is naturally better.
2) Minimum Account Deposits
How much do you need to deposit in order to trade? Most brokers now offer mini and even micro accounts that will let you trade for as little as $100 or even less.
3) Execution of Orders
Execution of orders is another very important thing to look for. The Forex market is very liquid, it moves very fast! Getting in and out of the market fast can mean the difference between profit and loss. Slippage is the term used when you can’t fill your order at price you specified. This can happen because the market moves to fast or because the broker is lazy!
4) Technical Analysis and Charting
Your Forex broker should have a platform with charting and technical analysis. Gone are the days of manual calculations. Today, all brokers worth a damn offer extensive technical analysis, charting and plotting.
Leverage is the x-factor in Forex. Where else can you trade for up to $400,000 for only a $1000 deposit? That’s right, nowhere! Leverage is when you borrow money from your initial deposit or open positions to increase your holdings.