Authored by Christopher Reed in Forex Trading
Published on 11-25-2008
If you think that forex brokers get a part of your money with each trade you make, you are wrong. Forex brokers actually don’t make money with every trade their clients make. So traders and market participants can trade all they want provided that they are aware of the broker’s terms and conditions.
With the vast number of forex brokers available to choose from, we have to be certain that we select the best. Be cautious of forex brokers whose terms and conditions include fees which are overly pricey. Some of their conditions are even unjustifiable that they are not worth mentioning.
Forex brokers primarily act as a link between the forex market and the private trader. Without a broker, things will be like hunting a wild animal using a water gun. So you see how important brokers are.
So, let us get to the point: How do you choose a forex broker? First you must consider the spread that is being offered by the broker. For everyone’s information, spread is the difference between the selling price and the buying price of a certain currency. This is calculated in pips. Since I already mentioned that brokers do not charge a commission on each trade, they use the spreads in getting their profit. Forex brokers may differ with their offered spreads and these usually vary from time to time. It is preferable that you choose lower spreads over higher ones because this means that the broker is charging less, thus you save more.
Another thing you have to consider when looking for a forex broker is its ability to offer extensive trading platforms. Trading platforms usually feature real-time market charts and tools and other data which are necessary to make your trading decisions properly. Also be certain that you can maintain constant communication with your chosen forex broker.
The broker’s credibility is also important. Be sure that you only choose companies which are known to provide client-focused and quality services. When choosing your forex broker, dig deep into its background. Know its affiliates and whether it is supported by any large institutions with large amounts of capital. Be certain that your broker is registered with regulating bodies such as the Future Commission Merchant (FCM) and the Commodity Futures Trading Commission (CFTC).
Getting started in the Forex Trading business involves choosing the right broker. Always be sure to make the right decisions even during this stage.