8 Useful Tips to Choose the Best Forex Broker
Choosing a FOREX broker who can fulfill your requirements can be a real challenge. Because of the popularity of forex trading, you can get hundreds and even thousands of brokers around you. But you have to find the best. It is necessary that you should consider your financial position, trading style and other factors before you start an account with a broker. Here are some tips which can help you to find the best high leverage Forex broker.
1. Spread Amount
The spread is the difference between how much you can sell or buy a currency at a particular point of time and it is calculated in pips.
Currencies are not traded via a central exchange market and so, the spread can be different as per the forex broker you hire. Some online brokers have varying spread; some have two spread amounts which depend on day and night.
Some forex brokers have their spread depending upon the position of the market. When the market is down, the spread is small and when it is busy, the spread is high. Forex brokers with a fixed spread are preferable, because over time, fixed can be safer.
Some points to consider regarding execution are:
- How fast is the order execution of the broker?
- Do they provide automatic execution?
- How much are you able to trade before needing to request a quote?
- Do they trade against you?
An excellent way to find out about all this is to open a demo account and do test trading.
3. Leverage Alternatives
Leverage refers to a ratio of the total capital available for trading to your actual capital. E.g. when you have this ratio 100:1, your forex broker lends you $100 per $1 of actual capital you have. Leverage is an essential factor in forex trading since the price changes in the currencies are set at even fractions of a cent.
Before appointing an online forex broker, understand well what is their leverage. Many brokerages provide a flexible margin which allows you to select the leverage right for you.
4. Account Types
See that the forex broker you find has a mini account or not. A mini account is created for those who are new to currency trading and have limited investment capital. A small deposit is required to begin trading, i.e. just $300 or less.
5. Trading Platform
Good trading software shows live prices which you can actually trade at, and not just indicative quotes. It offers Limit and Stop orders and ideally lets you attach these to your entry order. Another useful feature is One-Cancel-Others, which mean that you can set up your trade and leave the software to do the rest.
6. Tools and Value-added Services
Your forex broker should be one that offers the best resources and knowledge to help you make smart trading decisions. A good company provides real-time charts, real-time news and data, technical analysis tools and website or software support. Keep away from any company that doesn’t share any information or trial versions prior to opening an account. You should try out their system before you handle your money to them for investing.
Forex being a 24-hour market, your broker should offer 24-hour support. You should check whether you can close positions on the phone – a necessity when your PC or internet connection is down. You can contact their internet help desk to see how fast they respond to your queries.
8. Ask Around
Go on inquiring on forex forums about which forex brokers people use and why they choose them. This can help you find a real reliable forex broker.
Forex trading can become a profitable business if you choose a good broker who will teach you to trade smartly and so, you should be careful while finding one.