How to choose a Forex Broker
How to choose a Forex broker is one of those tasks that each individual trader will need to do their homework, because they are not all created equal. But here are a few criteria’s to look for.
1) How to choose a Forex Broker
Brokers earn money by collecting commissions or fees for their services. There is no such thing as free!
There are brokers who charge a flat fee and some that charge commission. It may be a good idea to talk with friends and business associates about their brokers.
You may get some good leads, and you're certain to hear who to stay away from. There is nothing like word of mouth advertising.
2) How to choose a Forex Broker
You should check that a broker is registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud or abusive trade practices.
A Forex broker also needs to be associated with an institution, such as a bank in order to provide funds for margin trading.
Contact their help desks and see how quickly they respond to your questions. If you don't get a speedy reply and a satisfactory answer to your question you certainly wouldn't want to trust them with your money.
3) How to choose a Forex Broker
Before you choose a Forex broker get a copy of their online demo account. So you can check what features are included. Is the software reliable? Does it offer automatic trading? Are there extra software features that wiil cost more money?
What are the margin requirements and how are they calculated? Does the margin change with different currency traded? Is it the same for mini accounts and standard accounts?
And if you are trading with a small account you should ask about minimum account balances and interest payments on account balances. Also make sure that your funds will be insured.
4) How to choose a Forex Broker
But the most important investigation needed to choose a Forex broker is how quickly will these brokers execute your buy/sell orders? What is their policy on slippage? What are the transaction fees? What is the spread, fixed or variable?