Choose Your Forex Broker Carefully
When you start trading in foreign exchange or Forex, you need to choose a broker or brokerage firm that is registered with the proper regulatory bodies. If you don’t, you could find yourself in dire straits.
If you are in the United Kingdom, look for Forex brokers who have registered with the Financial Services Authority, or FSA. You can check out UK-based Forex brokers on this website as well, located at fsa.gov.uk
Another thing you’ll need to check on is that your broker provides you proper support. At minimum, you should have 24-hour telephone and e-mail support. In addition, before you choose a particular broker, you’ll want to contact several brokerage firms’ help lines, to make sure they are prompt and courteous. Ask them some questions about their service and see how quickly you can reply. You should also make sure they answer your questions to your satisfaction. This will give you a good picture of whether or not their help is satisfactory, should you need something later. Of course, a company’s quality can also change after you open the account versus before, so this is not always the best indicator.
Another way to check out Forex trading firms is to go online and do a search with a particular trading firm name and the word “complaint,” to see if anything comes up that is unsatisfactory about a particular firm. You can also check out the Better Business Bureau’s website and type in the company name to see if any complaints have been filed against them.
If you intend to trade in foreign exchange with your own computer, make sure your broker offers online trading facilities. You’ll also need to be able to see your Forex quotes in real time. It will be of no help to you if trades are not kept up to date so that you know what you’ll be paying when you open a trade. It will obviously do you no good if the quote on your particular broker’s website for a trade is 30 minutes old.
Of course, you’ll also need to make sure that you can view your own account in real time, including any used and unused margins you have.
When you place an order for a trade, you have to be able to buy or sell at the currently quoted price. Simply put, your broker must use a “what you see is what you get” display, also known as a “WYSIWYG” display, pronounced, “wiz-ee-wig”.
In general, there are two types of online access. Each has its own advantages and disadvantages. The first, web-based software, is hosted on your broker’s website. With this type of software, you can log into your account from any computer as long as you have Internet access.
The second type is a client-based software program that runs on your own computer. With this type of software, you’ll only be able to log into your account from your computer. (Technically, you can install software and other computers, but this is usually not allowed with brokers’ terms of service.) Client-based systems have an advantage because they are usually faster than those that are web-based. One disadvantage for Mac users is that usually, these are only available for Windows platforms.
You’ll also need a fast Internet connection, either broadband or DSL. Dial-up is not fast enough, so that by the time you open your Forex trade, most often the quote will have changed from the quote you have displayed.
You’ll also need to find a broker that has both micro and mini lots. You can open accounts that trade with the smaller lots for just a few hundred dollars. Some brokers also offer fractional sizes, called odd lots, so that you can create your own trading unit size. In addition, you’ll need to make sure that your broker offers trading pairs in all seven major currencies, including AUD, CAD, CHF, GBP, JPY, EUR and USD.
Next, look for a broker that offers the smallest bid/ask spreads. Normally, this is five pips, but some brokers offer spreads that just have three or even two pips. Next, ask about your broker’s margin requirement. This can be anything from a quarter of a percent to about 5%. Remember that smaller margins mean that you need to deposit less money, and they’ll also give you greater leverage, but they have a disadvantage; your losses may also be greater.
How does your broker calculate rollover charges? These are charged to your account when you’re trade rolls over to the next trading day instead of being closed at the end of that trading day. These rollover charges are based upon the difference between the interest rate of the base currency’s country, and that of the quote currency’s country. For example, if the currency pair is CHF/USD, the rollover charges will be based upon the interest rates’ difference between the US (for USD) and Switzerland (for CHF).
Finally, make sure that your brokers trading hours coincide with international Forex trading hours.
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Help answer the question about forex broker
anyone know of a good forex broker for news trading?I've been trading the news for about 6 months now. FXDD have stopped filling me on all 3 accounts after making huge profits. I am using one good broker at the moment but not sure if they will fill me for much longer. I am in need of a broker who fill you at news times and doesn't up the spreads to silly amounts. Any ideas?
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Ian Armstrong -
About the Author:
Ian Armstrong is an avid Forex enthusiast.
Ian strongly recommends Easy-Forex as a trading platform and forex broker. See an objective, results-based review of “Easy Forex” at Easy Forex Review
Tags: Currency Trading, easy forex, forex, Forex Capital Markets, Forex Software, forex system, Forex Trading, fxcm
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June 5th, 2010 at 9:38 pm
try http://www.gomarketsaus.com, they're very good
June 5th, 2010 at 10:32 pm
First, you aren't going to be a talking to a broker. With forex, you will have an account with a dealer who will be taking the other side of your trades.
Second, since they are dealers, they make their money off the spread, not by charging fees or commissions.
Third, they are not banks or brokers, so there is no such thing as "proper insurance".
If you want to learn how the trades work google "forex" and you will see a list of dealers. Any legit dealer will give you a demo account free for 30 days.
Since forex is not governed by law anybody can be a forex dealer, but all the legitimate ones voluntarily register with the National Futures Association even though they don't have to because they are not actually futures brokers.
If you are looking for the best forex software, visit this site
http://Make-Money-With-Forex.org/
This software is the best software that can help increase your trading profit and user friendly.
June 5th, 2010 at 11:01 pm
I think you'll find that they each have their own pros and cons. I personally trade with Oanda, because they have really tight spreads, although they do get larger when big news comes out. They do allow you to scalp. The only real downside is the leverage isn't that great.
Hope this helps
June 5th, 2010 at 9:54 pm
Whatever broker you chose, run a mile from FXDD, the champions of requotes, invalid prices, and extremelly poor customer services. A real bucket shop.
June 7th, 2010 at 9:24 am
If you are looking for the best forex auto pilot software, check out this site
http://make-money-with-forex.org/
Here you'll find the best software that can help you to increase your profit automatically
June 7th, 2010 at 3:44 pm
I don't recommend dealing in foreign exchange at all. You're more likely to lose money than gain. If you do try it, watch out for the scammers.
June 7th, 2010 at 4:09 pm
If you are looking for the best forex auto pilot software, check out this site
http://make-money-with-forex.org/
Here you'll find the best software that can help you to increase your profit automatically
June 7th, 2010 at 8:53 pm
No any Forex brokers that I know offering USDBHT. Most importantly, the fluctuation for this pair will be minimum comparing to the major, as such less people will trade.
June 8th, 2010 at 9:34 pm
You can check Finexo's foreign exchange trading services (FOREX) in Europe are sponsored by the financial company DonauCapital Wertpapier AG (#108851) and regulated by Germany's Federal Financial Supervisory Authority, the BaFin.
June 8th, 2010 at 9:49 pm
The word "best" is a relative term, to which you do not illude; best spreads, best trading platform, best executions? A lot of beginners consider lowest spreads to be "best."
Whether forex brokers are "non dealing desks," I do not know, but easy enough for you to check out.
Spreads are fairly equivalent throughout the legitimate industry. That is not the most important question.
Your trading platform is most important, with a good data feed. Executions are more important than the spread, because they can eat up your penny or two spread difference on just a few trades if they're sneaky. The rules they apply are more important than any spread difference. I had one forex broker at FXDD that wouldn't take market orders in a fast market around reports. Incredulous.
Anyway, the best way to take a look at forex is to download NinjaTrader for free, and use the simulator that comes with it. The futures and forex datafeeds are free also.
http://www.ampfutures.com/index.php
The futures and forex data feeds are free. I get better fills with forex futures, but have NinjaTrader with forex spot installed on a separate computer and trade both. Futures margins are less than anywhere I've found, at $500 for forex futures and emini S&P and Dow. AmpFutures uses Dorman for their futures broker, and the Forex spot account is through Forex.com and Gain Capital. The Ninjatrader people will set you up with all of it.
I've tried several forex brokers and trading platforms, but Ninjatrader rocks, and it's free
I'm pretty sure Thinkorswim also allows trading of forex futures. In fact, most futures brokers will trade forex futures.