When engaging in forex day trading, it is essential for investors to employ the services of a forex broker. A good forex broker will not only implement your trades for you, he will also give you advice and even technical analysis to help you make the best trading decisions. Previously, a foreign exchange broker was usually a bank, since these were the institutions that mainly had access to the forex markets. But with the rise of the Internet, an investor can select a broker from anywhere in the world.
If you are doing forex trading, then you know the importance of a good forex broker. This is especially true if you are just starting out and do not have a lot of experience. A good forex trader will work with you and provide the information and tips you need to make the best trading.
So how should you pick a forex broker? There are many factors to consider, but one important consideration is, what country is the broker you are interested in based? Since many brokers are multinational with offices in many countries, what country is the broker regulated under? Can he accept clients from your country?
Another consideration is the capital available to you for forex day trading. What is the minimum amount the broker will allow you to open an account? Some brokers will allow an account as low as one dollar. On the other hand, one prominent brokerage requires a minimum $25,000 to open a trading account. Also, how much does the brokerage charge in transaction fees? Some brokers only allow electronic wire transfers with high service fees, while others will allow free withdrawals using checks, although it would take a few days longer to get your money.
Registered Forex Broker.
It is important that your forex broker is a registered member of a financial institution. Ask for his/her credentials. You want the assurance that he/she will be able to act on your decision and access the funds needed.
Check with the NFA (National Futures Association) if you doubt your forex broker is registered.
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.
With every currency pairs that you trade in, its actually different across the whole world. Therefore, you won't want to call a broker who is sleeping half a world away when you want to make your trade. Therefore, it is vital to have a broker who can take your orders anytime you want. Try to contact the customer service desk and see how they respond to your questions regarding forex trading. Make sure you're comfortable as these guys are who you entrust your money with.
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