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How
to choose a forex broker.
If
you're searching for a forex broker it's easy to get overwhelmed
by the sheer number of choices, available.
A quick
search on Google for "forex broker" easily yields over
191,000 search results, not to mention a ton of ads. So with all
of these potential brokers, where do you start?
The first
thing I would recommend is to check out the following:
What
is their minimum account size?
If you only have a couple
of hundred dollars to trade with, then this is a key factor.
Knowing the companies minimums will allow you to start the
filtering process.
What is the minimum transaction
size?
Some companies deal only in full contracts, while
others cater for mini-forex. Again, depending on your account
size, and your experience, this is a factor to consider. When
getting your feet wet, you may want to start off with mini forex
so that any lessons learned will cost you a tenth of trading the
full contract.
What is their spread?
The
spread is the difference between the bid and ask. These are the
prices you'd pay to sell and buy, respectively. The smaller the
spread, the less you pay. The spread is where most forex dealers
make their money, as most do not charge a commission.
Do
they charge a commission?
Most do not, as they make
their money from the spread. With the number of no commission
dealers out there, it pays to shop around.
What kind
of services do they offer?
Do they have charts?
Recommendations? or other services that you'd find handy?
Do
they have a free demo account?
The chance to test drive
their system can give you a good opportunity see what features
you like, and what you don't like. This can make a big
difference in your final selection.
When I was playing
with one demo account, I found that if I entered an order to
sell, then changed the currency, and entered executed the trade,
it automatically entered a buy, since I switched currencies.
This little quirk could end up costing you. By learning about
these things upfront, you can at least get an idea of what
you're in for, without the hassle of opening up an actual
account.
Some other aspects you may want to take note of
are:
Is
it easy to enter trades?
Are
the quotes easy to read?
How
much can you customize things?
Is
their platform intuitive enough for you?
One
of the easiest ways to keep track of everything is to keep a
chart listing key information. For example, if you visit
http://www.market-millions.com/ez/go.php?forex-list.art
you'll find a list of brokers
along with when they were founded, their commission rates, the
pip spread, minimum transaction size, minimum investment, if
they have a free demo account, and who they're regulated by.
Keeping a chart like this makes it easy to
systematically check out each broker, insuring you get the same
information from each. And when it comes time to narrowing down
the choices, it's all in one place.
Now besides the
features and requirements of each dealer, you may want to
consider where they are based. Their location will affect who
they are regulated by.
If you decide to choose a broker
regulated by the NFA or CFTC, you can checkout their standing,
and any complaints filed against them at:
http://www.nfa.futures.org/basicnet/
Search
by firm name, and you can get case histories, and any actions
brought against them.
Although this article is not a be
and end all to finding a broker, it will at least be a good
first step in the process.
Last, but not least, ask
around. Visit a couple of boards and see what people are saying
about various brokerages.
Continued success!
Ray
Chong
Ray
Chong
P.S. If you're itching to get started in trading
forex, but don't know where to start, my friend Mark McRae (who
is a forex trader) has just released a new book. He walks you
through the basics, introduces you to his trading system and
includes lots of examples to get you on your way. He not only
guides you on which currencies to focus on, he
illustrates a simple way to incorporate trends, Fibonacci and
price targets to help you focus on winning trades to an
awesome degree. If you're at all interested, please visit his
site at: http://www.market-millions.com/ez/go.php?sforex.htm
he can tell you much more about
it than I can.
P.P.S. If you'd like to get specific forex
newsletters, please subscribe below. If you have specific forex
questions, please send them in to
forex-questions@market-millions.com.
Each issue will seek to answer your questions.
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