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January 27 2016


how choose the right forex broker

Forex broker comparison
The first particular step to your successful trading would be to choose a Forex broker. There are several questions that must be answered prior to being able to decide responsibly. Brokers' revenue and available information will not facilitate this decision. Below you will discover information on the basic items you may encounter when selecting a Forex broker and the ways to overcome those issues.

forex brokers comparison

You cannot move forward without a Broker, and choosing the right one is vital and highly important. This is the reason why this topic is amongst the most discussed throughout Forex forums.

Before you start trading Forex, you need to set up an account with a broker. The broker is essentially a mediator, individual or company that buys and sells orders according to the retailer. Brokers profit either from charging a fee for their services, or (and that is more often) from the spread. With the huge number of brokers making themselves available online, it's likely you could feel helpless and overloaded by plenty of information you may don't know what to do with. And it is challenging choose the right broker.

There are many brokers, from the solid and reliable ones towards the crooked and dishonest trying to pluck their clients. You must take a look on published references and keep to the advices to protect from the sophisticated marketing brainwashing. Broker is often a necessary mediator between you and the market. Its main task would be to fulfill your orders to purchase and sell a currency forex trading. Services, such as the fast transfer of money to him and back and a reliable platform must be standard of all brokers above the average.

When selecting parameter, it is appropriate to give preference to people that are related to your style of trading (fees, spreads, etc.), as opposed to peripheral ones like language support, assistance on what to buy and sell, etc.

Take into account one thing - before you begin your search, it is good to consider the fact that terms like "best, cheapest, most dependable, etc." make no sense in the industry of Foreign exchange brokers and usually, the real interest of brokers who use those terms is solely to enable you to trade currencies as much as is possible regardless of whether you get or lose money.

Criteria for choosing a Forex broker

There are lots of criteria that are worth looking at before you fill in the registration form with a broker. Competition among Forex brokers is huge, which guarantees a neat chance of a good choice. It pays to accept the time to choose a broker that will best fit your needs and you will be able to use their services for your leisure.

Regulation and References

The very first thing you may want to take a look at when deciding on a Forex broker could be the issue of security. Are looking for out if the selected broker is registered with any regulatory authority. In the us, a broker should be registered as Futures Commission Merchant (FCM) using the Commodity Future Trading Commission (CFTC) and should be a member of the nation's Futures Association (NFA). The two authorities - the CFTC along with the NFA are on the market so that you can protect the public against fraud, manipulation and illegal trading practices.

On the website of the National Futures Association's you can check the registration of a particular company or individual with all the CFTC and the NFA. Focus on how the company you choose has a clean regulatory records and solid financial background. And observe out! It is not recommend using services of unregulated companies or individuals regardless.

Common foreign exchange controls include:

 Banning the use of foreign currency within the country
 Banning locals from possessing foreign currency
 Restricting currency exchange to government-approved exchangers
 Fixed exchange rates
 Restrictions on the amount of currency that may be imported or exported

Forex trading controls are great shape of controls imposed with a government on the purchase/sale of foreign currency by residents or on the purchase/sale of local currency by nonresidents. Much like depositing your money in every bank or lender, before you deposit with an on-line forex broker, it's important to comprehend which regulatory is going to be looking after your funds. In the united states, the National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC) are given the job of overseeing off-exchange foreign currency exchange broker transactions.

As such, each forex company that's in any way involved with US traders, or perhaps located in the US, has to be registered and licensed using the NFA and CFTC. So, a high level US resident looking to trade forex, you must inquire about a prospective forex broker's regulation in the united states before you decide to use their helps.

Since the NFA/CFTC regulations regarding forex transactions are very stringent, only a minority of foreign currency trading brokers are eligible to simply accept US forex traders.

In Europe, you will find a wide range of regulatory bodies given the job of overseeing forex transactions with on-line fx brokers depending on the country.

In britain, the Financial Services Authority gets the mandate of regulating off-exchange currency exchange exchange trading.

In France, the Autorit de Contrle Prudentiel with the Banque de Franceis responsible for "the licensing of French financial firms and monitoring compliance by entities susceptible to its authority."

In Italy, the CONSOB (Commissione Nazionale per le Societ e la Borsa) describes itself because competent authority for ensuring transparency, disclosure and compliance by securities market participants.

Other financial regulatory bodies are available for Denmark, the Netherlands, Switzerland, along with other European countries.

It's a good idea to take a few minutes and inquire about a forex trading brokers regulatory status before you decide to use their investment services. Past the issue of financial regulation and supervision for on-line investors, it's also important to ensure that the trading platforms you employ and the financial transfers you initiate when conducting your forex investing with on-line fx brokers are secure.

The other aspect of account safety is encryption, and the physical safety of the account data against theft. Firms like Markets.com, and Finexo take great worry about these aspects of safety, but there are also many others that assume a proactive attitude for this crucial side of running a brokerage business. To help our task, technologies like SSL-encryption are standard available nowadays, and if you never see them implemented, it is time to depart for better, more serious brokers.

Also, there are numerous sites on the Internet dealing with Forex and also on these websites you will find references to several brokers from around the world. You will probably find references also here. The reputation one of many clients is an important factor when deciding about the Forex broker. However, in case you still want more in-depth reference and also you resort to any discussion forum, always ask the way the broker behaves in crisis situations, such as:

 Performance of market orders in a important announcement
 Stretching spreads
 Extraordinary market movements
 Communication in poorly filled orders, etc.

Communication with Customer

When searching for a good and reliable Fx broker for your trading, it is recommended to find out how - and particularly how quickly and operatively - a broker can communicate with you. Take a look at all the options. That means that if the broker is able to communicate by telephone, test it. Test also how quickly he responds to an e-mail, determine if he is using Skype or another types of online communication on the web. Check the possibility of helpdesk. Each broker provides a solid chat today, which means you should try also this type of communication. But at the same time, you should check who you are conversing with when using a helpdesk; if you are talking to someone competent rather than to someone who will give you an e-mail to their technical department on every possible issue. Also, since the currency market is often a market that operates continuously, it is good to find out if the connection along with your broker can be fully guaranteed Twenty-four hours a day.

Trading Platform

A fundamental part of the brokers' service is a trading platform on which you can serve your account. Many brokers use platform called MetaTrader 4 (MT4), but many others also provide their own platforms including graphs and charts. In the perspective of your comfort is important that the platform meets your needs of control which all functions are user-friendly.

You should have all the necessary information available at every moment:

 List of your open positions
 List of your respective closed positions
 Overview from the account usage for margin - in percentage, by way of example
 Statement of account
 Overview with the SWAP or premium fees

Try some different software to see which suits you best. Check the reliability of the program by opening a demo account first. An inappropriate and badly selected program cost you not only time, but also money.

Information on what sorts of orders you can use along with your broker is also extremely important. If you can open the identical currency pair at two opposite positions simultaneously - i.e. one short then one long. Or if you can divide your role so you can close one half of the position and then leave the second in trade. It appears that these things are not important rather than worth the concern, but they're decisive when it comes to your satisfaction and it's important to include them within your decision-making process.

Guaranteed "STOP" and "LIMIT" Orders

Brokers are separated into several basic groups in accordance with how they are dealing with your trades. Either these are dealing with them in their own system or they're forwarding them to the interbank market as well as to other market participants. The first ones are also referred to as "dealing desk" brokers, and so they do not guarantee the mentioned order, so in reality it appears that after you typing your order to sell or buy currency they'll re-quote prices, or basically they'll disallow entry for your price, or worse.

Fees, Spreads, Leverage

Sales fees also referred to as spreads are one of the main reasons for brokers income in addition to their goal is obviously to own spread as high as possible. If we look at an example of EUR USD, the place that the spread is 2 pips and the current BID prices are 1.2875 and the current ASK costs are 1.2877, so you buy and sell at the ASK BID, even though the broker buys and costs a BID ASK. It's logical and possesses its reason. Nevertheless, it remains an endeavor of brokers to have the spread as high as possible; plenty of competition forces the crooks to narrow spreads. Let please take a brief look at the usual spreads for individual currency pairs:

 EUR/USD 1-3 pips [excellent to get affordable condition]
 GBP/USD 3-5 pips [excellent to good condition]
 CHF/USD 3-5 pips [excellent to good condition]
 EUR/JPY 3-5 pips [excellent to good condition]
 JPY/USD 2-4 pips [excellent to good condition]
 CAN/USD 4-6 pips [excellent to good condition]

Whatever is above this range, should be taken with caution and care.

Leverage and Margin

Leverage is one of the advantages of trading Forex. Nonetheless it can be a disadvantage for you if you understand it incorrectly. Leverage lets you handle or control a larger amount of currency. Quite simply, the greater the leverage, the less you may need margin. But the leverage must be used wisely. Greater leverage might be of assistance, nevertheless, you must be able to manage it. Find out what options of leverage your broker offers. You ought to have also check the sized rollover fees, if you hold your positions overnight.


Slippage may be the difference between estimated transaction price as well as the actual entry price. You're able to do a test program making use of your demo account so that you calculate how fast your Broker fills in your order after you have pushed the button to buy or sell.

Computer and Mobile Equipment

Another facet of decision-making is related to the technical aspect and depends on the OS you employ. Most platforms operate correctly on Windows, but if you are using a Mac, it's going to be a good idea to verify the opportunity of using Mac using your broker. The same will cover using a mobile phones or smartphones.

Data and Currency Pairs Available

It could be very surprising if any of the brokers focusing on Forex charged data services. Today, the foreign currency market has become so interesting that it's standard to have all data, including graphs and charts with various indicators for free. However, you must at least verify these details. You should also verify the currency pairs that the broker is able to offer for your requirements. Generally, a broker might still offer you the major currency pairs, but when you're interested in exotic pairs like USD CZK, take a look option before choosing your broker.

Mini Accounts, Micro Accounts, Minimum Deposit to Open an Account

What is the minimum deposit on the getting an account is very important information for those with limited capital to start an account or people that don't want to invest a whole lot of into trading currencies. The low limit is somewhere around $250 - $300. This opportunity relates to the use of mini and micro accounts. For mini accounts you're operating with a standard lot of 0.1 as well as for micro accounts the standard lot is 0.01. In practice, this means that if you swap a micro account and open a position in the EUR USD, the price of one pip for you is $0.1. Almost all of the Forex brokers are trying to adapt to this trend and invite opening a standard micro account using a minimum deposit.


In conclusion, it is important to point out that, as in everything that relates to trading, a choice of a broker is your personal decision. Usually do not leave this selection to other people because you will bear the obligation and the consequences of one's decision, be it a good one or a bad one. As well as if you don't feel comfortable with your broker or else you are not satisfied for any other reason, you are not obliged to remain with him forever - a change is possible at any time.

If the first selection of a brokerage isn't entirely appropriate, signing a binding agreement with the broker is not an marriage for life and it is common for traders to migrate between brokers on account of advantageous offer or need. Technically, it is extremely simple.

Don't be the product, buy the product!