When you are ready to start trading currencies on the foreign currency exchange (forex) market, it is important that you choose the right broker. A bad broker can steal your money while a great broker is set up to help you achieve maximum profits.
Practicing forex trading before risking your money is an important part of the learning process. It is also recommended that you practice any new strategies on a demo account before trying them on your live account. Good brokers have demo accounts available, free of charge, to their customers. Many also provide free demo accounts to anyone, regardless of whether they are a current customer or not.
There are some brokers who claim they can make you rich beyond your wildest dreams. Avoid them! If a broker is willing to start the relationship with a lie, you are better off finding a different broker. No one can promise that you will make money at forex. It is a fact that most people who do try trading currencies will lose money, not make money. Choosing a reputable broker is an excellent first step in making sure you are successful in forex trading.
“No dealing desk” brokerage accounts are fairly new. With a “dealing desk” broker, you send your trade request which is then checked out by the broker at the dealing desk. The trade may be executed, but the broker could instead decide to make you a different offer. This makes it difficult to make fast trades in a fast-moving market. A broker that offers “no dealing desk” accounts can execute trades immediately. When you place the trade, it is executed without going through a middle man. This allows you to be competitive in the forex market.
The customer service hours and availability vary by the broker and type of account. For instance, a traditional account with FXCM entitles you to 24 hour customer support via telephone, email and live chat. If you have a micro account with FXCM, you only have access to customer support via email. You must decide what level of customer support you require, then choose a broker that provides that level of service. It is also a good idea to check out the true availability of a broker’s customer support department. If the broker offers assistance via telephone, give them a call. Some brokers do not answer the telephone and any assistance must be rendered via electronic communication.
An excellent broker offers reasonable leverage. If you live in the United States, regulations prohibit brokers from offering leverage any higher than 50:1. If you live elsewhere in the world, you can find brokers offering leverage as high as 400:1. It is recommended that you avoid brokers who offer such high leverage. Instead, choose a broker that offers no higher than 300:1 leverage. Brokers that offer really high leverage are known as “bucket shops” for a reason.
Excellent brokers offer their customers “extras” such as world news, market watch, market analysis and more. It is much easier to have the resources you need for forex success in one place while you are trading instead of having to visit multiple websites to obtain the information you need. Brokers that have currency analysis and news that affects the foreign exchange market available to their customers are more likely to be top-tier brokers.
If you choose a good broker you are already ahead in the forex business. You want to know that your money is safe with your broker, that you can easily deposit and withdraw funds, and that your broker is not manipulating accounts in its favor.
