Finding a suitable forex trading broker sometimes can be as challenging as finding the right marriage partner. While this sounds exaggerating, the truth is with so many brokers out in the market, it can be a tough choice to open an account and work with one that you can be happy with. The commissions, account charges, pip spread, service support standard and all count towards what makes an outstanding forex trading broker. Learn 5 handy tips here and you would be in better shoes than most traders.
Since the foreign exchange market is decentralized, it can be hard to identify fraudulent practices by unscrupulous brokers. When finding a broker, do make sure to follow the following pointers and your chances of finding an honest and reliable forex trading broker are dramatically increased!
1. Request for references so that you can get in touch with them.
2. While the currency market is not controlled by a central body, each country may have its own regulatory body or watchdog organization to exercise certain control over the business activities of these forex trading brokers. If the dealer is based in the US, do a check at Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) to see if the dealer is registered with these two organizations. Find out if there is any bad report or complaints against your prospect.
3. Make a comparison of account specifics like the minimum required deposit to open an account, spreads, commissions and the like. Be sure to find out if they have other charges like lot fee and so on. It is always good to deal with brokers who are transparent with the costs of trading with them. Sometimes, the so-called "lowest spread" dealers are not the most reliable ones because of hidden transaction costs.
4. The trading platform that is provided would need to be easy to use. There are two versions, one using downloadable trading software and the other web-based. Some interfaces are so hard to comprehend that most first-time traders give up very quickly. If there is a demo account, you can sign up and try.
5. REQUOTING. This is a big pitfall that many traders fell into before realizing. Low spreads and commissions do not mean much if the forex trading broker decides to "trick" you with requoting. Basically, what it means is that when you transact with a buy/sell call for a currency pair at a certain price, the broker requotes and charge you on the requoted price rather than what you see.
Do not undermine this requoting matter. Some currency dealers may requote on a difference of more than 8 pips. That is a lot if you are trading on small price ranges. There have been complaints from traders about many which requote whenever they are profiting. Avoid these and try finding one that does not do so or at least not so often.
With these golden tips, you are now equipped to search for a professional broker to open an account with. Currency trading is not for the faint hearted. They can be risky but with controls and certain good investing habits, the profit potential is huge. Discover from my website which forex trading broker has scored well for each of the aspect we spoke about earlier and pick up more useful tips on foreign exchange trading today.
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Pick up useful tips on forex trading from Davion's wildly popular Forex Trading Made Easy blog - learn currency trading and discover great tools that can supercharge your profits.
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