A Guide to Forex Brokers
It should be made clear that there are many important concepts that need to be clear before forex trading is initiated. If you are not ready and go ahead and open a forex account, in a short while you will lose all your money. You, therefore, need to look at the main important qualities a forex broker possesses. This will be the way you select the best forex brokers. This will be your guide in deciding which one to pen an account with.
You need to think of things like forex margin, forex leverage, ECN forex and forex spread. You can for instance look at the margin offered by the forex brokers. A margin of 2% means that you can leverage your money by 50 times. This figure is a the moment the highest you can go.
This imposed maximum has not been received well by forex brokers coalitions, and most have decided to trade in foreign markets, in order to beat the barrier. You need to read through the review sites to find more information regarding this matter so as to find the best places to trade. You need to be especially keen when it concerns the safety of your money. There has to be in place enough regulations that ensure you shall not lose your money hen a broker goes bankrupt.
Find tout id the brokers are market makers or use ECN. This information shall prove rather critical. A forex broker with a dealing desk can trade against our positions. ECN brokers are therefore preferred. On the other hand, ECN brokers can turn out to be costly if they charge a commission or each trade. You are now forced to balance your options, between the market makers and ECN.
You need to look at what kind of forex spread there is. When you notice A LOW spread, you will be in luck since you will not incur huge commissions. ECN forex brokers offer very low spreads since their platforms can tap into a huge pool of liquidity providers. You also have to determine whether the spreads are fixed or variable. The problem with variable spread is that there is always a fluctuations when a major financial news item is broadcast. Spillage can occur, where you order is filled at a price that is not what you were expecting. You need to gauge the levels of spillage that may occur.
You need to look at such things when you are selecting a forex broker. They also need to have demo and micro accounts for your practice. Those who are new to forex trading need to use these accounts first. After then can they use standard accounts.