How To Choose A Forex Broker
The importance of the Forex Industry can be seen in the fact that this industry amounts 5.3 trillion dollars each year. It is very easy to understand the significance of the industry in the international trade, which grows approximately at the rate of 3 to 5 percent each year. However, it is a complex process to find out the best Forex Broker.
There is a countless number of brokers in the Forex industry and therefore choosing a right one for a newbie is a daunting task. The biggest of all problems is a businessperson does not know where to start while looking for the Forex Broker for his international trade. Given these complexities, we have put together the facts as well as precise information in a few steps to help you find the most suited Forex Broker for your business near to you.
Do you think summing up such vital information in just a few steps is possible? Well, very much it is. We have designed three-step information that will ensure you will find the best Forex Broker for your business needs.
The first step is all about asking the right questions related to your business and needs to your own self. In a second step, you will understand the aspects for which you would require to compare different brokers. In the third step, you will understand the process of opening a demo Forex account and gathering the right information. Let’s start!
Step1: Choose your Forex Broker
Is start searching a Forex Broker straightaway as soon as the need arises a right way? Not really. You need to ask the specific questions that describe to you the nitty-gritties of your requirement in detail.
We have put together some of the questions for you:
Whether you want to work with a registered Forex Trader or not? Working with unregistered Forex Broker is a risky job, and you may have to pay a higher commission rate while exchanging the money. But if you wish to work with a registered Forex Broker you need to identify his country, whether he is from the U.S. or the U.K. or some other country. There are a number of regulating agencies such as National Futures
Association (NFA) or Commodity Futures Trading Commission (CFTC) or Financial Service Authority (FSA), which regulate the business of foreign exchange not only in their own country but across the globe wherever their member brokers are associated.
The next question should be related to Dealing Desk or Non-Dealing Desk broker. It is also important to understand the reach of the broker across the country. Simultaneously, knowing the facts about fixed commission rates against non-fixed commission rates is also critical in determining the Forex Broker. Through these questions, you will be able to understand the facts that if your broker is looking for quick money or up to offering reliable services. It is widely understood that widespread Forex Brokers may reduce your profit margins using variable Forex rates and unscrupulous trading strategies.
Have you ever heard about “leverage the killer”? Your broker may offer you financial incentives for opening a standard account, despite the fact that you may not have enough capital. Ultimately, this turns into financial losses. Therefore it is essential to start with a demo or micro account.
Step 2: Compare Brokers.
There are a number of factors you may require critical information about to determine your next Forex Broker. Once you compare these factors against brokers, you will be able to figure out who will work for you.
Compare the requirements of the initial deposits that your broker ask you to pay. Usually, demo account can be opened with $250. However, with leverage, you may enjoy much greater buying power.
Another factor you must consider is ease of deposit and withdrawals. Usually, Forex brokers bar you from withdrawing the large amount. Brokers usually insist on a wire transfer to earn bigger transaction fees.
The next factor you must consider is paired currency. On the list, you will find all the international currencies available. However, only a few gain the attention. In order to trade a greater liquidity is important, which only comes with major currency.
Another important thing is a trading platform, which is basically known as investors zone to the market. Each trader must enquire with his broker, the software, the use and its technical aspects.
Last but not the least is the bottom line. Developing Forex strategies is very critical to your business. This end the analytical tools available with your broker may help you gain profit as well as experience in a longer term.
Step 3: Demo accounts and Queries
Once you are done with comparing various aspects of the number of Forex brokers and actually deciding your broker, you will be made to think about opening an account. There you need to determine the type of account based on capital that you have. We recommend you start with a demo account with minimum transaction capital.
Almost all the brokers offer a similar kind of demo account with key aspects vary from others. This allows you to understand the various features and aspects of various trading platforms. Make sure you never hesitate from asking right questions to your broker whenever there is a confusion relating to foreign exchange. All you will be doing with the demo account is testing waters. Once you gain the confidence of your Forex broker, you can go for the standard account and broader foreign exchange strategies.