7 RULES FOR CHOOSING A FOREX BROKER

With the rapid rise of Forex Trading over the last few years, the number of brokers available in the market is also growing at a rapid rate. Most traders are scratching their heads when it comes to choosing a reliable broker to trade with. Unless you are a bank or large financial institution, you will need a broker to trade currencies. In fact, all individual traders need a broker to trade in the Forex Market. This is a critical step to take before you can begin your journey as a Forex Trader.
However, not all brokers are of the same mould. You will need to find a broker that meets your specific needs as a trader. This is where the difficulty lies since not all brokers offer the same services or have the same policies. This can affect your ability to trade effectively. In this article, we will discuss the 7 rules that every trader must consider when choosing a Forex Broker.
1. REGULATION
The regulated Forex brokers are accountable to the authorities. They have specific regulations to follow. With these brokers, most of the information is available online and you can easily find out their past performance. To find out if a Forex broker is regulated, you first need to find out which country the broker is registered in. Always choose a Forex broker that is conducting business in a country where their activities are monitored by a regulatory agency.
For example, US Forex brokers should be a member of the National Futures Association (NFA) and registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC). In Switzerland, the regulatory body is the Swiss Federal Department of Finance. If a broker is not regulated at all, it might be wise to choose another broker.
2. SPREAD
In another words, low transaction cost. Unlike futures or stocks, currencies are not traded through a central exchange. Hence, different brokers may quote you different spreads. Spread is a MAJOR consideration in every good trader's mind because choosing a broker with unusually high spreads is a sure-fire way to kill off your account.
Additionally, do 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 the day it is.
Some brokers use a variable spread, which means that the spread varies depending on the market conditions. Typically, this would mean a small spread when the market is quiet and a wider spread when activity heats up. When you play with a wider spread, take note that the market must move more in your favour before you start to see a profit.
Over the long term, fixed spreads can be safer for a trader.
3. TRADING PLATFORM & SOFTWARE
The best way to get a feel of the broker's trading software is to try out the demo account, which is readily available. Choose one that you would be most comfortable with when trading. The software should have basic features like trailing stops and direct trading from the chart or price quotes.
Some features may only be available at a cost, so be sure you understand what you are getting and how your broker is charging for the added services. The speed of execution is also very important. Be wary of brokers who do not "honour" the price feeds displayed. This happens most often through "re-quotes" and delays in getting the price that you clicked. For the record, the most popular trading software which Forex traders all around the world use is called the MT4 (Meta Trader 4) platform.
4. SUPPORT
The Forex Market is a dynamic market. Over 3 trillion US Dollars is traded every single day, 24 hours a day. Your broker should ideally offer 24-hour support. Check out the avenues of support provided - is it through a direct telephone line or just a simple email address? Most reputable brokers now have a "Live Chat" function, where traders can engage a customer service officer readily, anytime of the day. You should also check if you can close positions over the phone - absolutely essential in the event your most trusted PC or Internet connection crashes at a critical moment (think Murphy's Law).
5. MINIMUM TRADING SIZE REQUIREMENT
Many brokers offer different types of accounts. The two most types are the "standard account" and the "mini account." A standard account means that the trader uses lots of 100,000 units. A mini account means that the trader uses lots of 10,000 units. Hence, 1 "mini" lot is 10% of a "standard" lot. The main difference between the two accounts is the "payout". For a "standard" account, 1 pip is usually worth USD10. In a "mini" account, 1 pip is worth USD1. A "pip" is a unit of measurement for each up tick (or downtick) in the currency charts. A "mini" account is appropriate for a beginner because, while the profit potential is lower, the amount of risk involved per trade is also lower. Do check that your broker offers "mini" accounts, especially if you are new to Forex Trading.
6. MARGINS AND LEVERAGE POLICY
Ensure that you understand the broker's margin terms before setting up an account. What are the margin requirements? How is their margin calculated? Does it ever vary according to the currency pair being traded? Or even the day and time of the week you trade? Some brokers may offer different margins for "standard" and "mini" accounts. In terms of leverage, most brokers offer anywhere from 50:1 all the way up to 400:1. Leverage is truly a double-edged sword. As a general rule of thumb, don't use too much leverage. It's one of the biggest reasons why novice traders blow up their accounts.
7. WITHDRAWAL FEES
Ultimately, the benchmark of any Forex trader worth his salt is to be consistently profitable in the Forex Market. Check that there are not too many "financial leaks" deterring you from this goal. Do a comparison on the withdrawal/wiring fees of some brokers. Over the long term, you would be wiring back a portion of your profits on a consistent basis. For some traders, it could mean once every several months. Do your homework early so that the fees incurred do not cause too much of a dent in your trading profits.
Always remember to trade on a demo account for at least 2 months first before going LIVE on your chosen broker.

HOW TO CHOOSE THE BEST BROKER FOR FOREX TRADING?

So, you've decided to start trading forex? That's great news! Forex trading is exciting, can be very profitable and it's a form of trading that has exploded over the recent years. Ok, you want to trade forex. The next step is to choose a forex broker. A forex broker is your connection to the forex market and will sell and buy forex as you instruct them too. This service isn't free of course. Brokers make money trough commission either as a flat fee or more commonly by taking a few pips from every trade - known as the spread. Choosing the best broker for forex trading will depend a lot on what your needs are and how you plan to trade. Some things to consider are:

How much money do you want to invest?

All brokers have a minimum deposit that you need to have in your account in order to trade, but apart from that, there can be huge differences. Some brokers allow you to trade with as little as $50, while others require $100,000.

How do you want to trade?

Do you want to make many small trades or a few big ones? The commission structure of a broker can greatly affect your profit margins.

How much customer support do you need?

As a new trader you'll probably want to know that you can talk to a customer rep 24/7, and it wouldn't hurt to get some free training material as well. If you're more experienced, then you may just want to be able to get hold of customer support if there's a technical error

WHICH ARE THE TOP FOREX BROKERS?

This article is about the top forex brokers in the market. In forex trading there's a few brokers that stand out from the rest and they are Sax Bank and Gain Capital Trading. Both are huge brokers and have the market cornered. Both offer trading in stocks, bonds, derivatives, commodities and forex. Both have great customer support and reliable and advanced trading platforms.

So is there really any reason not to choose one of them as your forex broker? Well, do you have $100,000 to deposit, because that's the kind of money you need to trade directly with either broker at decent rates. Sax Bank do offer a forex account with only a $2000, but you will pay so much in commission and fees, that it will likely not be feasible to trade with that amount. Gain Capital requires $100,000 to open a trading account. They also run Forex.com, which has a much smaller minimum deposit (only $250), but they don't seem to be popular with traders online. Too expensive, the thing is, these two brokers are aimed at institutional and professional traders. They're not aimed at smaller private traders. In fact, you could get the impression that the high minimum deposits and fees is a deliberate attempt to discourage smaller investors and focus on the big players. Nothing wrong with that of course. It just doesn't help you.

But where do you go if you don't have that kind of money? There are a lot of brokers available. If you read reviews online then there are two things you're invariably going to run into: The very positive and the very negative reviews. Forex is a very competitive market and even though it can't exactly be proved, it wouldn't be too much of a stretch to think that forex brokers spend some of their marketing budget on 'reputation management'! Just keep in mind that things are most likely not as bad or as good as the reviews claim. To find the top forex brokers, you'll have to try for yourself.

WHO IS THE BEST FOREX BROKER? WHAT TO LOOK FOR WHEN CHOOSING A FOREX BROKER

Let's get right to it, this article is about how to choose the best Forex broker for you. I'm going to give you some tips on what to look for when choosing a Forex broker, but if you are just looking for one name, then Sax Bank is the best choice for a professional trader. Note that I wrote professional trader here. Sax Bank is considered the top dog in trading platforms (Sax Trader platform), but they're not for everyone. They require several thousand dollars in minimum deposits and their commission is high unless you trade big numbers. If that description fits you, well then they are probably your best choice. If you're not in a position to trade worth $10,000 - $20,000 regularly, then you could be better of with a smaller broker.

A quick word about Forex brokers first. Remember that a Forex broker is not your friend, nor your enemy, but the bottom line is that they make money by charging you a commission in one way or another. Most are decent and trustworthy, but as with all businesses, there are some that use shady practices such as stop-loss hunting, high turnover or unfair spread widening. You want a broker that you can trust and that will not try to pick away at your money every chance they get. Here's the top 3 things to look for:

Cost

What's the spread like with the broker? Some brokers charge a flat commission per transaction, while others use a spread based commission system. Lower spreads are obviously better than higher spreads. Are the spreads fixed? Some brokers increase spreads during periods of heavy trading. This can naturally impact your profits.

Charting and Platform

How is the user interface? A Forex trading platform should have good charting and the option to use technical analysis and draw trend lines etc. How flexible is the platform? You're going to spend a lot of time with the trading software, so it's necessary to be comfortable.

Customer Support

Forex trading takes place 24/7. How fast is support? It sucks to have a technical problem during your trading hours, only to have to wait long for a solution. Check their response time. Do they offer support in several languages? Most of the world speaks English, but some times it's easier to explain yourself in your own language.

Let's recap, the most important things to look for in a Forex broker are:

• Cost
• Charting and Trading Platform
• Customer Support