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

In The News:


pen paper and inkwell


cat break through


The Seven Most Traded Currencies in FOREX.

Currencies are traded in dollar amounts called "lots". One lot... Read More

Is The U.S. Dollar About To Reverse Course?

For the first time in several years the U.S. dollar... Read More

Writing A Trading Plan

All professional traders have a trading plan. Trading futures is... Read More

Momentum Trading: A Practical Day Trading Strategy to Get Profits from Hot Stocks

Momentum day trading can be extremely profitable when done correctly...Day... Read More

Experience

Throughout our course on futures trading, we have tried to... Read More

Financial Crises, Global Capital Flows and the International Financial Architecture

The recent upheavals in the world financial markets were quelled... Read More

Business and the Forex

The business world is a complex web of supply and... Read More

Options Trading - Advantages and Disadvantages

What is Options Trading?An option is simply granting someone the... Read More

The Miracle of Forex

My father, who owns a small parts store and garage... Read More

Choosing A Forex Broker

With currency trading becoming ever more popular, the number of... Read More

A Look at Online Forex Brokers

An online forex broker is a firm that facilitates retail... Read More

Trading Tips No 1: Learn How to Trade The Moment of Truth

So you have learned how to trade the markets by... Read More

How to Trade Currency

We all know when you go on a trip to... Read More

Intrenet Marketing VS Forex Currency Trading

Have you noticed that when someone's trying to sell you... Read More

The Secrets of the Super-Traders

The first and perhaps most important "secret" is to realize... Read More

Online Stock Trading: Freedom of Trade

I remember the first time I started to trade online.... Read More

Creativity in Trading

"Is it important to be creative in your trading?"I'm not... Read More

Forex Broker Involvement Optional

To trade on the forex market, the largest financial market... Read More

FOREX - Where Fortunes Are Made Everyday

The Foreign Exchange Market ? better known as FOREX -... Read More

Sending Signals for Trading in Forex

Forex signals are sent by a forex firm to their... Read More

10 Steps To Professional Day Trading

Everyone trades a little differently. The trading method outlined below... Read More

Where to Get Forex Training

For those of you who are interested in forex trading,... Read More

Money Management - The Holy Grail Of Trading

Money management determines how much to risk on each individual... Read More

Your Mother Could Make Money In Forex Trading

The question would be not whether she could but rather... 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... Read More

How Do Other Countries Devalue Their Currencies?

Countries devalue their currencies only when they have no other... Read More

Forex Signal, Forex Signals Advice

There are lot's of Forex signals providers out there. New... Read More

What are Your Options Regarding Forex Options Brokers?

Forex option brokers can generally be divided into two separate... Read More

Ways to Acquire Discipline in Trading

One way to acquire discipline in trading..."Hey Joe! When you... Read More

Internet and Computer Systems in the FOREX Business

With every passing year the interest in electronic trading is... Read More

Forex Trading Online - 7 Reasons Why You Should!

Forex trading online is a fast way to use your... Read More

Why Hedge Foreign Currency Risk?

International commerce has rapidly increased as the internet has provided... Read More

E-currency Exchange Trading

If you are reading this article you are probably one... Read More