Study: My Understanding of Trading

A Guide to Forex Brokers

You need to understand many things to do with forex trading before you can start on the actual trading. If you do not do this but go ahead and trade, you will regret that decision. You have to be conversant with the main critical qualities a forex broker has. This is how you select the best forex brokers. This will be your guide in deciding which one to pen an account with.

You have to think of criteria like forex margin, forex leverage, ECN forex and forex spread. You should begin with look at the margin offered by the forex broker. A 2% margin affords you a leverage of 50 times on your money. It appears to be the current maximum one can access.

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.

You have to establish whether the brokers are market makers or use ECN. This information shall prove rather critical. You cannot rule out a forex broker who has a dealing desk turning against your positions. ECN brokers are therefore preferred. You also have to consider that ECN brokers may turn out to be more expensive, when they decide to charge a commission per each trade. You will have to strike a balance between these too; to go with ECN or market maker brokers.

You need to examine the forex spread. If they have a low spread, you are in luck, since they do not charge a huge commission. ECN forex brokers can afford to give very low spread due to the fact that their platforms can tap into a huge pool of liquidity providers. You will also need to see if 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 is another factor to consider, where your order is filled at a different price than what you were expecting. You need to see what amount of spillage might occur.

These make up the search criteria for a forex broker. You also need to access a demo and micro account for you to practice on. Beginners need to go through this. After then can they use standard accounts.

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