Choosing your forex broker can be quite daunting if you’re starting. It’s crucial to choose a forex broker that offers sound advice and has a history of winning trades for its clients. When choosing your forex broker, you really should think about trading tools and systems, the variety of forex pairs available, broker leverage levels, customer support, and, of course, fees.
But comparing fees is tricky in forex-trading: while some brokers charge a flat commission, most advertise no fees, making money at the bid-ask spread on your trades. Some forex brokerages charge a percentage of what you earn to help fund the campaigns of other firms.
Forex broker leverage can also have an impact on your earnings. The higher a forex broker’s leverage, the more trades and pips (trades per day) a broker can get from each trade. However, to truly maximize your earnings, it’s best to stick to a broker that uses a system that lets you trade up to a five-mi value (i.e. the maximum value of a currency can trade for in one day). If you trade forex at a higher leverage level, you will enjoy greater volatility in your trades, but it can also mean you have a higher risk since you are risking more per trade.
One of the things you want to look for in a forex broker is whether or not they are regulated. Forex brokers with zar accounts must register with the regulatory agencies that set the rules and guidelines for the industry, such as the Commodity Futures Trading Commission (CFTC), or the Securities and Exchange Commission (SEC).
These agencies regulate not only brokers but the industry as a whole. They also educate and make available information to both brokers and traders about the trading costs, minimum deposit requirements, and other requirements. For example, all brokers are required to read full disclosure documents regarding their various services and must disclose all fees associated with any services provided.
In addition to regulation, forex brokers must be licensed and follow strict guidelines that help ensure their high level of integrity and professionalism. For example, CFTC-regulated investments offer higher interest rates than investments that are not regulated. You will want to find the best forex brokers by looking at the fees they charge and the kind of reputation that they have in the industry. As a general rule, forex brokers who charge higher fees or do not have strong customer service reputations tend to be less reputable.
Finally, you will want to check out the various currencies offered by the different brokers. Forex brokers typically cater to either the US dollar or the Euro/Japanese Yen pair, so it’s important to choose one that lets you trade in the currencies you most want to use. However, if you plan to deal with several currencies, especially when you are trading in multiple markets, it may be more practical to seek a forex broker that provides a platform that allows you to trade in multiple currencies.
For instance, if you are interested in trading the US dollar/CAD pair but also the Euro/JPY currency pair, then it may be more useful to find a broker that can provide you with screens that show the pair of currencies you wish to trade with.
