If you want to trade forex you need a forex broker and there are plenty around, here we will give some tips on picking the best for forex brokers and how to maximize your potential with them.
Many traders see brokers as the enemy who lose them money but the fact is there neither your friend nor your enemy – their simply there to transact your orders in an efficient, cost effective and timely manner and that’s it.
The most vital points to consider when dealing with a broker are the following:
1. Competitive Spreads
Pay no more than 5 pips on the majors and if you shop around you can get 2 – 3. This is your cost of doing business and needs to be kept low.
2. A Reliable Trading Platform
If you are trading online this is imperative and most trading platforms today are brilliant – but make sure you test drive it, for usability via a demo account to prove it to yourself.
3. Leverage
Any broker today will give you more leverage than you will ever need. 100:1 is fine – but many brokers will go up to 400:1.
4. Security OF Funds
Look for well established brokers who use segregated accounts have been in business for years rather than months. The longer they have been in business and and the larger they are the better.
What You do NOT Want From a Broker
A lot of brokers sell higher fees based upon the service they give you in terms of trading recommendations etc.
Keep this point in mind – if brokers were excellent at trading they wouldn’t be brokers, ignore them and do your own trading signals.
Useful EXTRA Services
Some brokers give extra services away that are useful such as discounts on trading tools, books and newsletters which a lot of traders like – but there is one service we saw recently which is brilliant for novice traders and it’s called:
A PROTECTED ACCOUNT
If you are new to forex trading, then you will probably try a demo account to get the feel of trading but useful as they are for learning the mechanics, they don’t replicate the feeling of dealing with real money.
Many brokers to help get novices feet wet with limited risk offer Protected Accounts, to act as a bridge between a demo account and a full trading account.
They allow traders to trade with small amounts of money and do as many trades as they like in a set period (normally a couple of weeks) and the trader can still trade even if he is debit!
At the end of the period the broker covers the losses if any and the trader takes the profits.
This means a trade as much as he wants – even when he is debit on a set leverage and has a set risk in advance.
These accounts give the feel of forex trading but have set risk and will show a forex trader his potential, before moving to a full trading account.
Finally ..
Getting the right forex broker is simple and you only have to keep a few points in mind and then you’re all set, to enter the exciting and lucrative world of currency trading.
