Choosing a Forex Broker
As with any other market, there are several forex brokers to select from. Here are a few things to look out for:
Get the resources you require to succeed!
- Comprehensive research and tools Forex brokers, like brokers in other markets, provide their clients with a variety of trading platforms. Real-time charting, technical analysis tools, real-time news and data, and even support for trading algorithms are common features of these trading platforms. Request free trials to evaluate several trading platforms before committing to a broker. Technical and fundamental data, economic calendars, and other studies are typically provided by brokers.
Leverage your bets!
- A variety of leverage options Because the price variances (profit sources) in forex are only fractions of a penny, leverage is required. The amount of money a broker will lend you for trading is stated as a ratio between total capital available and real capital. A 100:1 ratio, for example, suggests that your broker will lend you $100 for every $1 of actual money. Many brokerages give up to 250:1 leverage. Remember that lesser leverage means a smaller chance of a margin call, but it also means a lower return on investment (and vice-versa).
Lower spreads save you money!
- Spreads are low. The spread is the difference between the price at which a currency may be bought and the price at which it can be sold at any particular time, measured in “pips.” Because forex brokers do not charge commissions, this is how they generate money. When comparing brokers, you’ll see that the spreads in forex are just as large as the fees in the stock market.
Make certain that your broker is supported by regulatory organisations and a reputable institution.
- A reputable institution. Because of the high sums of cash necessary, forex brokers, unlike equities brokers, are generally affiliated to big banks or lending organisations (leverage they need to provide). Forex brokers need also be registered with the Commodity Futures Trading Commission as Futures Commission Merchants (FCMs) (CFTC). This and other financial information and data about a forex brokerage may be found on its website, the website of its parent firm, or the BrokerCheck website of the Financial Industry Regulatory Authority.
Avoiding Broker Actions in Forex Trading
- Hunting or sniping Sniping and hunting, defined as buying or selling at predetermined prices before the market opens, are unethical practises used by brokers to boost earnings. Unfortunately, the only method to tell which brokers do this and which do not is to speak with other traders. There is no blacklist or organisation that tracks this type of behaviour.
- Strict Margin Requirements Your broker has a say in how much risk you accept while trading with borrowed funds. As a result, your broker has complete discretion over whether or not to purchase or sell, which might be detrimental to you. Let’s imagine you have a margin account and your position drops before rising to new highs. Even if you have enough cash to meet a margin call at that level, some brokers will liquidate your investment. This move on their side might end up costing you a lot of money.
Trade with Capital Street FX
- High Leverage – Upto 1:1000
- Access To Over 1000 Trading Instruments
- 0.1s Execution Trading from Charts
- Raw Spreads as Low As 0.1 Pips
- Instant STP Execution
- FSC Regulated Brokerage
- Segregated Clients Account
- Secure Funding with Multiple Payment Systems
- No Dealing Desk Execution
- Physical Office Locations In 10 Cities
What's your reaction?