An online Forex broker is a firm, such as Avafx, Etoro, Easy-Forex which acts as medium for matching buyers and sellers of foreign exchange currency or Forex as it is often nicknamed. They usually do this for a nominal fee or commission. Online brokers are regularly employed to monitor and maintain the 24-hour Foreign exchange market place and assist in providing liquidity in the market. A Forex trader will have to make use of broker in order to engage in trading activities on the Forex market.
There are a host of online brokers but all do not offer the same services and have the same philosophy. When it comes to your money, you must be sure your broker meets your expectations. It is entirely your right to ask as many questions as you want to your broker. If it does not respond, you should be urged to find another one.
Size matters. Since the Forex market is a decentralized OTC market, not everyone has access to the same price and same quality of execution. Online brokers with trading volume and the largest financial strength have access to the best price and best execution. More important is the broker, the better your experience on the foreign exchange market, the more chance you will profit.
Dealing Desk. means your Forex broker sets the price and executes your orders. The spread is usually fixed which implies that it is generally a little higher than variable spreads. There are also some restrictions on the opening of positions for certain economic events, yet at crucial moments to trade.
No Dealing Desk. usually means that different prices are in competition and that the broker provides the best possible prices. Orders are executed by the banks providing prices. This implies the absence of restrictions on the orders at the time of crucial events of trading.However, it should always be certain by contacting your broker. Some brokers that have no dealing desk also charge a commission on top of the spread.
Pip split. all major pairs are quoted to four decimal places so a pip equals 0.0001 in general. Often forex brokers round up or down to the nearest pip but more and more brokers now offer fractional pips. In other words, another digit is added which allows for a much smaller spread and more accurate.
Scalping the market. Many traders prefer scalping strategies. Scalping is where an order is only kept open for a short period of time. There are forex brokers that have strict rules on scalping, such as how long the trade has to be opened for before it can be closed.
Registered Forex Broker.
If you have just entered the world of foreign exchange trading and looking forward to select a forex broker, you need to make sure that the broker to be selected by you is reputed and regulated. This is primarily because only eminent and regulated brokers would provide you the peace of mind when you are buying or selling foreign exchange in the market.
Before we read any further, it is important for you to note that selecting the right forex broker could be 1/4th of the job done for you. The remaining is primarily all about forex education and qualities such as determination, perseverance, and risk-taking ability (calculated risks taken at the right time and place).
It is very important for you to realize that making a profit can be next to impossible if the forex broker selected by you trade against its clients and implementing practices that work against them. It is for this reason that only a regulated and reputed forex broker should be chosen.
Your forex broker should remain in contact at all times. Whether it be via cell phone, email, instant messaging etc. Your broker should know forex trading is a 24 hour standby job and fluctuations in trading can happen quite quickly. Therefore it is important you can get hold of your forex broker when you need him/her
Before you select a forex broker, ask for his/her references. Call those references and ask them about their opinions on the forex trader. By doing this, you can assert whether the forex broker is experienced and whether he/she is able to execute a trade effectively and successfully.
It would be best to contact more than one references to get an accurate feedback on the forex broker.
Cost of Broker.
Many people when looking for a forex broker are overly concerned about the cost. Usually more experienced forex brokers as well as those with a good track record of successful trades demand a higher price.
One way of choosing a broker is by looking at initial deposit that they ask. Initial deposit is not needed as it is not for investment purposes, but just to pay the broker in case they're not paid during the course of investment. The ideal payment should be between $200 to $500 depending on the market movement.
A good software should be simple, easy to use and at the same time is clear on the investment that you're making. If you are new to forex trading, your broker should be able to let you trade on a demo account. A demo account works the same as a real software but it gives you the opportunity to test it before you actually make your first real trade.
Variety of Currency Pairs.
Every good broker should be involved in different currency pairs and that makes them offer a lot of selections. So, choose at least a broker that has currency pairs that you are most interested in. Remember that every currency pairs have their own patterns in the market.
This communication has to be all about rules and regulations linked to the demo accounts and the reconfirmation would help you find the real truth behind "claims" of the broker. A broker that provides different versions to the same question is obviously a scam and a broker that has the same versions to the same question could be considered as a genuine entity. It is only after spending quality time and experiencing complete professionalism & transparency with the broker that you should even think of going for a live trading account.
If you can follow these forex trading tips, you will surely find the best forex broker for you in the highly lucrative foreign exchange market.
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