Choosing A Forex Broker

With currency trading becoming ever more popular, the number of brokers is growing at a rapid rate. What should one look at when deciding which broker to open an account with? These are the important points to consider.

Spread

Because currencies, unlike futures and stocks, are not traded through a central exchange, the spread can be different depending on the broker you use, so it's well worth checking a few out before you open an account. Most forex brokers publish live or delayed prices on their websites so you can compare spreads, but check if the spread is fixed or variable. A fixed spread means exactly that - it will always be the same no matter what time of day or night it is. Some brokers use a variable spread, which might appear to be nice and small when the market is quiet, but when things get busy they can widen the spread which means the market must move more in your favor before you start to make a profit. Fixed spreads are generally slightly wider than the variable spreads are when at their narrowest, but over the long term fixed can be safer.

Execution

Some brokers will show live prices on their trading platform, but will they honor them when it comes to pushing the Buy or Sell button? The best way to find out is to open a demo account and give them a test drive. This will also give you the opportunity to see what the speed of execution is like - when you want to buy, you want to buy now, not sit around waiting for ten minutes whilst your order is confirmed!

Trading Platform

Good trading software will show live prices that you can actually trade at, not just indicative quotes. It will offer Limit and Stop orders, and ideally will let you attach these to your entry order. One-Cancels-Other orders are another useful feature - they mean you can set up your trade and then leave the software to get on with it. And the most important feature of all - can you actually understand the platform? Having all the bells and whistles is of no use if you can't use them, so again, get a demo account and give it a go.

Support

Forex is a 24 hour market, so your broker should offer 24 hour support. You might not be trading at 3am, but that could be what time it is in your brokers head office on the other side of the planet, so make sure there will be somebody there to pick up the phone if things go wrong. You should also check if you can close positions over the phone - essential in case your PC or internet connection crash at a critical moment.

Backing

Finally, before opening an account do a little homework and find out about the company. Forex brokers are regulated, but that doesn't mean they all have equal backing. If the market collapses, you want to know that they've got the reserves to cope with it and will still be around when you decide to withdraw your cash. If a broker is elusive when it comes to questions about their parentage and financial backing, then steer clear.

In Conclusion

Choosing a forex broker isn't difficult, but don't rush the decision. Check out a few, and always get a demo account first to make sure you're happy with the way everything works before sending off your opening balance.

About The Author

Geoff Turnbull is a full time day trader, and a contributor to http://www.forexheaven.com

---

Trading Timeframes

Long TermLong term traders will work from end of day data and look to hold trades for a few weeks up to many months. Usually trend trading.AdvantagesNo... Read More

Online Forex Trading

Foreign exchange currency trading is also known as Forex trading, or FX, and has no single physical marketplace like the New York Stock Exchange does on Wall... Read More

Money Management, Part 1

There are some common mistakes I've seen traders make in the area of money management. First, let's understand what money management is all about.Money management overlaps with... Read More

Facts of Day Trading

Are you thinking of entering the fast-paced world of day trading? Arm yourselves with the information from this fact sheet on day trading.What is day trading?Day trading... Read More

Types of Foreign Currency Hedging Vehicles

The following are some of the most common types of foreign currency hedging vehicles used in today's markets as a foreign currency hedge. While retail forex traders... Read More

The Meaning of FOREX Price Charts and How to Use Them

There is one very important factor that you should consider with great care if you are willing to become a successful, profitable Forex trader. This ever important... Read More

Welcome to the World of Currency Trading

Indeed large multinational and individual banks and other major financial institutions have dominated FX trading (also known as Forex trading), but there is a paradigm change in... Read More

Two Timeless Rules in FOREX Investing

RULE #1) ~ Cut your losers; let your winners ride.One important thing that every new trader must know before entering this highly profitable business is that life... Read More

Forex Signal, Forex Signals Advice

There are lot's of Forex signals providers out there. New Forex traders might be thinking of looking for a reliable Forex signals provider. Is there any reliable... Read More

A Look at Forex Market Makers

The investor in the currency market takes for granted that a pair of currencies can be bought or sold at a moment's notice. Once an order is... Read More

Risk and Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career.

You know the old joke:"How do you make a million in the stock market? Start with two million?"There is no way around it, risk and stock market... Read More

Forex Broker

A broker is any person or firm that charges a fee in exchange for executing trades for a trader. A Forex broker does not charge a commission... Read More

The Basics of Forex

Foreign exchange market is also known as Forex or FX market. To date, it is the world's biggest "economic bazaar". FX produces an average of over $1... Read More

The Miracle of Forex

My father, who owns a small parts store and garage for vintage British sports cars, called me up recently and droned on and on about how he... Read More

Forex Training: Follow Your Gut or Your Broker

Which way will the forex market move? Do you just follow your gut feeling? Or do you have Neo's sixth sense that would let you be one... Read More

Creativity in Trading

"Is it important to be creative in your trading?"I'm not sure I can describe it in terms of importance. The creative process is somewhat of a mystery,... Read More

Stock Market Report: Day Trading or Swing Trading Online? Stock Investing Information

Profitable day traders recognize that momentum trading is among the fastest & most effective ways to harvest BIG piles of cash in the stock market.The problem is... Read More

Trading Profitably on the Foreign Exchange Market

You may be asking yourself "how does one begin to trade profitably as a currency trader?".First, it is important to closely monitor foreign equity markets to attempt... Read More

Discovering Turnaround Candidates

There are many types of investment methodology out there. All of them has their own merits. I for one, personally like to invest in turnaround stocks. What... Read More

Forex Trading Can Be Like Day-trading

Forex trading, or foreign currency trading, has become a bit of a craze of late, especially since it is something available to anyone who owns a computer.... Read More

What I Learnt Losing £60,000 My First Year as a Full-time Trader

During my first year as a local (independent trader) on the floor of LIFFE, I bought and sold 8804 FTSE futures contracts, about 40 contracts per day... Read More

Internet and Computer Systems in the FOREX Business

With every passing year the interest in electronic trading is bigger, more especially trading shares and currency through Internet. A new profession came forward ? this of... Read More

A Fools Game

I received an email this week with a question (below) which caused me to think about the wisdom of pursuing trading as a career. Regardless of your... Read More

Stopping Yourself

I read on a bulletin board a traders comment that on his first outing trading the E-Mini S&P 500 he lost on each of his trades. He... Read More

Reality of Online Forex Trading

Foreign exchange trading is the trading of currencies. Most currencies can be traded. Huge amounts of currencies are traded 24 hours a day, 5 days a week.... Read More

Hedging Foreign Exchange Risks

The exchange rate of the Macedonian Denar against the major hard currencies of the world has remained stable in the last few years. Because of the IMF... Read More