When you decide that forex is the way to go and you’re ready to begin trading, the first thing you need to do is find a reputable broker. Sure, you can go online and find oodles and gobs of brokers vying to get your account. But how do you choose the best one? Not the most profitable broker or the one with the most experience, but the one that you can work well with? Even with the same training and background, different brokers have different personalities and it is reflected in the way they handle accounts. Take some time to research a few different forex brokers, and then narrow your list down until you select the broker that is the closest match to your trading style and will help you achieve your end goals.
Checking Credentials
First off, check that the broker in question is registered with the relative regulating authorities. If they’re American, are they registered with the Commodity Futures Trading Commission (CFTC) or the National Futures Association (FSA)? What type of deals is this broker taking? Fixed spreads or non-fixed? Ask how wide the spreads are so that you’ll understand if this broker goes for quick profits on only a few pips. Remember, you’re looking for a broker that fits your personality and trading mentality. Ask up front if the broker debits or credits daily rollovers of interest. This may affect whether you want to hold onto positions overnight.
Open a Demo Account
When you’ve chosen one or two brokers that meet your standards, go ahead and open up demo accounts with them. That will be the best way to compare them. Begin to trade in various market situations, and take time to understand what each trading platform has to offer. Be sure to take advantage of each broker’s support network. Don’t hesitate to approach their customer service support with every question you have. This is how you’ll learn.
Moving On to Live Trading
Once you’ve gotten your feet wet in a demo account, it’s time to go live. If you’re pleased with the way your broker is representing you, then go a bit deeper. Find out if your broker has a high security level. This is best done BEFORE handing money over. This is easy, since you only need to query one of the regulatory agencies that are located all over the world. Then, you’re going to want to understand what your costs will be for each transaction. With every trade you enter, you’ll need to pay for the forex spread or for a commission. For this reason, you might want to go with a broker who charges minimal fees. Here’s where you have to determine the correct balance between high security but low transaction fees.
Check Out the Trading Platform
Bottom line? You need to feel comfortable on the trading platform that your broker uses. Take it for a test drive and make sure it is stable and user-friendly. Then, the choice is yours!