3 Tips to Choosing the Right Forex Broker
Having read enough information on Forex it is now time to put your knowledge to the test and apply what you've learned. The first thing you'll want to do is establish a Forex account. To do this, select a Forex broker to place your trade orders with. Selecting the right broker however is no easy task. There are several considerations that need to be made when selecting the right broker for your Forex trades, such as dealing with high spreads, sufficient capitalization, and 24/7 service. There are other considerations as well, but let's focus on the 3 tips that can help you select the right Forex broker for you.Forex Broker Tip #1 - Shop around to get the Lowest Spreads
Some brokers prey on new traders because they have no clue and are unaware of the fact that they can negotiate to get the special price they want. The spread, which is the difference between the ask and the sell price, is where most Forex brokers make their money. It's possible that some brokers may be more flexible on pricing when you want to open your account, depending on the amount of money you decide to open the account with. You can always ask about alternative pricing, and just go somewhere else if you do not like what is being offered to you. If the spread is acceptable, then you will need to obtain information on the broker and his/her capital outside of the client base.Forex Broker Tip #2 - Check your Broker's Capital Requirements
Many traders are not aware that the National Futures Association (NFA) has a requirement that brokers must hold a portion of their capital in reserve. Brokers are also required to hold a portion of their CLIENT's capital in reserve as well. Every Forex trader needs to be aware of this requirement, in the extreme case that a brokerage firm shuts down. So should this ever happen, know that they will have a portion of your capital in reserve, and will owe it to their client (you). The NFA maintains a website at http://www.nfa.futures.org/ that lists this and other rules and regulations governing brokers. There is even a way to file complaints in cases of fraud or client abuse. A broker has an obligation to his clients but will not inform you of every single one, so only educating yourself to those obligations makes you a better client.Forex Broker Tip #3 - Check if there's a 24 hour Helpdesk
This should be so obvious that I shouldn't even have to say it, but I'll say it anyway as you might not realize the importance of this yet. If your broker does not have a round-the-clock helpdesk, simply DO NOT sign up with them. How so? Since you will at one point or another experience platform issues and if they are not there to assist, you might loose all of your cash from one small technical bug. Believe me, I know what I'm talking about here, been there done that. When I was trading I found myself in a situation where I had gained over $4,500 in profit and the broker's platform froze on me... I had lost $500 between the glitch occurring and the time the help desk corrected the issue. And that was WITH the availability of a 24/7 helpdesk!Forex trading, like all trading and investing, can be risky. While this risk adds a certain level of excitement, the key is to educate yourself and develop a relationship with a good broker. A good relationship, founded on open communication and diligent research into the broker and his firm will help alleviate some of the risk, protect your investment and help it grow.
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